<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                      ANNUAL REPORT PURSUANT TO SECTION 13
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended                            Commission File Number
March 31, 2002                                       000-17994

                      MACKENZIE INVESTMENT MANAGEMENT INC.
             (Exact Name of Registrant as Specified in Its Charter)

                Delaware                                59-2522153
     (State or Other Jurisdiction of        (I.R.S. Employer Identification No.)
      Incorporation or Organization)

  925 South Federal Highway, Suite 600
            Boca Raton, FL                                 33432
(Address of Principal Executive Offices)                 (Zip Code)

        Registrant's Telephone Number, Including Area Code (561) 393-8900

        Securities Registered Pursuant to Section 12(B) of the Act: None

        Securities to be registered pursuant to Section 12(g) of the Act:
        Common Stock, Par Value $.01 Per Share
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

YES [X]   NO [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]

There were 18,655,550 shares of the Company's Common Stock outstanding as of
July 2, 2002. Based on the last sale price of the Registrant's Common Stock on
the Toronto Stock Exchange on July 2, 2002, the aggregate market value of the
shares of such Common Stock held by non-affiliates of the registrant was
approximately $10,484,000.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement (the "Proxy Statement"), to be filed
with the Securities and Exchange Commission relating to the Company's Annual
Meeting of Stockholders to be held on September 12, 2002 (the "Annual Meeting"),
are incorporated by reference in Part III hereof (as indicated therein).

<PAGE>



                       INDEX TO ANNUAL REPORT ON FORM 10-K

<TABLE>
<CAPTION>


                                                                                                  Page
                                                                                                  ----
<S>              <C>                                                                              <C>
FORM 10-K REQUIRED INFORMATION

PART I

     ITEM 1.    BUSINESS                                                                            4

                General Developments of Business                                                    4
                Financial Information about Industry Segments                                       7
                Narrative Description of Business                                                   8
                    Investment Management and Advisory Services                                     8
                    The Products                                                                    9
                    Administrative, Transfer Agent and Fund Accounting Services                    14
                    Distribution Services                                                          15
                    Custody and Brokerage                                                          16
                    Restructuring                                                                  17
                Risk Factors and Cautionary Statements                                             17
                Regulatory Environment                                                             19

     ITEM 2.    PROPERTIES                                                                         20

     ITEM 3.    LEGAL PROCEEDINGS                                                                  20

     ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                SHAREHOLDERS                                                                       20

     ITEM 4A.   EXECUTIVE OFFICERS OF THE REGISTRANT                                               20

PART II.

     ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                STOCKHOLDER MATTERS                                                                21

     ITEM 6.    SELECTED FINANCIAL DATA                                                            22

     ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS                                                23

     ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                MARKET RISK                                                                        30

     ITEM 8.    CONSOLIDATED FINANCIAL STATEMENTS AND
                SUPPLEMENTARY DATA                                                                 30

     ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                ON ACCOUNTING AND FINANCIAL DISCLOSURE                                             31

PART III.

     ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT*                                31

     ITEM 11.   EXECUTIVE COMPENSATION*                                                            31

</TABLE>




                                       2
<PAGE>
<TABLE>
<CAPTION>

<S>              <C>                                                                              <C>
     ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                AND MANAGEMENT*                                                                    32

     ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                     32

PART IV

     ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
                REPORTS ON FORM 8-K                                                                32

     Signatures                                                                                    38

     Table of Contents for Consolidated Financial Statements                                      F-1

     Management's Report to the Shareholders                                                      F-2

     Report of Independent Certified Public Accountants                                           F-3

     Consolidated Financial Statements                                                            F-4

     Notes to Consolidated Financial Statements                                                   F-8
</TABLE>

---------

*    The information called for by Items 10, 11 and 12, to the extent not
     included in this document, is incorporated herein by reference to the
     information to be included under the captions "Election of Directors,"
     "Securities Ownership of Certain Beneficial Owners and Management,"
     "Section 16(a) Beneficial Ownership Compliance," "Named Executive Officer
     Compensation," and "Voting Shares and Principal Ownership" in the Company's
     definitive proxy statement, which will be filed by July 29, 2002.


THIS FORM 10-K RESTATES CERTAIN FISCAL YEAR 2000 AND 2001 FINANCIAL INFORMATION
AS DESCRIBED IN ITEM 7 AND NOTE 2 TO THE CONSOLIDATED FINANCIAL STATEMENTS.



                                       3
<PAGE>


FORWARD-LOOKING STATEMENTS

         Certain statements in this Form 10-K under the captions "Business",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", and elsewhere in this report constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
general economic and business conditions; the loss of, or the failure to
replace, any significant advisory or sub-advisory relationship; changes in the
relative investment performance; and investor sentiment for international
investing. These forward-looking statements speak only as of the date of this
Form 10-K. The Company expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Company's expectations with regard
thereto or any change in events, conditions or circumstances on which any such
statement is based.

                                     PART I

ITEM 1. BUSINESS.


GENERAL DEVELOPMENT OF BUSINESS

         Mackenzie Investment Management Inc. ("MIMI") was incorporated under
the laws of the State of Delaware by Certificate of Incorporation dated April
18, 1985. MIMI is a majority owned subsidiary of Mackenzie Financial Corporation
("MFC"), a Toronto-based investment counsel and mutual fund management company.
As a result of a takeover bid, effective April 20, 2001, MFC became a wholly
owned subsidiary of Investors Group Inc. ("IGI"), a leading Canadian financial
services organization.

         MIMI provides, through various subsidiaries, investment management,
marketing, distribution and other administrative services to Ivy Fund, which is
a Massachusetts business trust registered under the Investment Company Act of
1940, as amended (the "40 Act"), as a U.S. open-end investment company,
consisting of sixteen separate portfolios as of March 31, 2002.

         Ivy Management, Inc. ("IMI"), a Securities and Exchange Commission
("SEC") registered investment advisor and a wholly owned subsidiary of MIMI,
provides investment advisory services to Ivy Fund and provides sub-advisory
services to twenty-one Universal mutual funds sold only in Canada and managed by
MFC (the "Canadian Funds") as of March 31, 2002.

         The following table provides a summary of net assets under management
and associated revenues. The U.S. mutual funds consist of international equity
funds, domestic equity funds, a taxable fixed income fund and a money market
fund. The Canadian Funds consist of the Universal mutual funds. As of March 31,
2002, net assets under management for the U.S. mutual funds and Canadian Funds
totaled $2.8 billion.


<TABLE>
<CAPTION>

                                                                     As of March 31,
                                         ----------------------------------------------------------------------
                                            2002           2001           2000           1999           1998
                                         ----------     ----------     ----------     ----------     ----------
                                                                     (in thousands)
<S>                                      <C>            <C>            <C>            <C>            <C>
Net assets under management
U.S. mutual funds(1)                     $1,053,018     $1,615,480     $3,512,187     $3,330,892     $3,917,952
Canadian Funds                            1,739,981      1,437,379      1,328,136      2,051,468      3,515,816
                                         ----------     ----------     ----------     ----------     ----------

   Total net assets under management     $2,792,999     $3,666,948     $7,028,003     $4,768,271     $5,246,088
                                         ==========     ==========     ==========     ==========     ==========

</Table>



                                       4
<PAGE>

         See Item 7, Management's Discussion and Analysis of Financial Condition
and Results of Operations, for restatement of previously reported results of
operations relating to accounting for selling commissions paid on Class A and B
shares of Ivy Fund.

<TABLE>
<CAPTION>

                                                                  For the years ended March 31,
                                             ---------------------------------------------------------------------
                                               2002            2001           2000           1999           1998
                                             --------        --------       --------       --------       --------
                                                           (in thousands, except per share amounts)
<S>                                          <C>             <C>            <C>            <C>            <C>
Revenues
Management fees (1)                          $ 12,026        $ 24,022       $ 32,546       $ 33,813       $ 33,223
Sub-advisory fees - Canadian                    7,163          10,012          9,468          5,994          5,556
Funds
12b-1 Service and Distribution fees             3,985           7,632          8,924         14,676         14,650
Transfer Agent fees                               627           3,007          2,994          3,019          3,013
Administrative and Other Fee Income             3,096           4,594          4,853          7,319          6,583
Other income                                      601           2,880          4,721          1,435          2,071
                                             --------        --------       --------       --------       --------

   Total revenues                            $ 27,498        $ 52,147       $ 63,506       $ 66,256       $ 65,096
                                             ========        ========       ========       ========       ========

AS RESTATED:
   Net (loss) income                         $   (485)       $  2,174       $  5,678       $  8,318             (2)
   (Loss) earnings per share - basic         $  (0.03)       $   0.12       $   0.30       $   0.43             (2)
   (Loss) earnings per share - diluted       $  (0.03)       $   0.12       $   0.30       $   0.43             (2)

AS PREVIOUSLY REPORTED:
   Net (loss) income                               na        $  2,643       $  6,448       $  8,549       $  9,526
   (Loss) earnings per share - basic               na        $   0.14       $   0.34       $   0.45       $   0.51
   (Loss) earnings per share - diluted             na        $   0.14       $   0.34       $   0.44       $   0.49

</TABLE>

----------------

(1)      Non-Canadian sub-advised funds, which represented less than 1% of net
         assets under management, are included for the years ended March 31,
         2002 and 2001. There were no non-Canadian sub-advised funds for the
         years ended March 31, 2000, 1999 and 1998.

(2)      The Company's results of operations and earnings per share for the year
         ended March 31, 1998 were not restated. The restatement described in
         Item 7 of this Form 10-K did not affect the Company's financial
         position or results of operations as of and for the year ended March
         31, 1998.


         In June 1998, MIMI entered into a normal course issuer bid, which was
approved by the Toronto Stock Exchange ("TSE"), to purchase up to 945,000 shares
of its common stock. The bid commenced on June 10, 1998 and terminated on June
9, 1999. During this period, MIMI purchased 400,800 shares of its common stock
at the market price at the time of acquisition for a total cost of $1,701,923.
In July 1999, MIMI entered into another normal course issuer bid, which was
approved by the TSE, to purchase up to 941,610 shares of its common stock
representing 5% of the issued and outstanding common shares at the date of the
notice. The bid terminated in July 2000, by which time MIMI purchased an
additional 243,400 of its common shares at a total cost of $867,504. All shares
were acquired at the market price at the time of acquisition. MIMI believes
that, at the dates of repurchases, its common stock was undervalued at the then
market prices based on its earnings and that the repurchase of the common stock
was an appropriate use of corporate funds that should benefit shareholders.

         In September 1998, the shareholders of MIMI approved, at its annual
meeting, an amendment to its Certificate of Incorporation to increase the number
of authorized common shares from 30 million to 100 million. The additional
authorized common shares benefit MIMI by providing the Board of Directors the
flexibility to respond to business needs and opportunities as they arise, and
for other corporate purposes.

         In July 2000, the Company entered into a normal course issuer bid,
which was approved by the TSE, to repurchase up to 500,000 of the outstanding
shares of the Company's common stock,



                                       5
<PAGE>

representing 2.7% of the issued and outstanding common shares at the date of the
notice. The bid terminated in July 2001 without the Company purchasing shares.

         In the last five years, MIMI has positioned itself as an investment
specialist with a worldwide perspective offering mutual funds with an emphasis
on international and emerging growth investing. MIMI intends to concentrate its
marketing efforts on the sale of mutual funds that specialize in the
international and emerging growth areas.

When used in this document, the following terms generally apply unless otherwise
noted:
<TABLE>
<CAPTION>
         <S>                                <C>
         the "Company"                      MIMI and its consolidated subsidiaries

         the "Funds" or the "U.S. Funds"    the separate portfolios of Ivy Fund

         the "Ivy Funds"                    the separate portfolios of Ivy Fund, collectively
</TABLE>

         MIMI is an SEC-registered investment advisor and conducts business
through three Boca Raton, Florida based, wholly-owned subsidiaries as follows:

                  IVY MANAGEMENT, INC. ("IMI") is incorporated under the laws of
                  The Commonwealth of Massachusetts and is registered with the
                  SEC under the Investment Advisers Act of 1940. IMI has
                  exclusive management agreements pursuant to which it manages
                  the Ivy Funds and provides sub-advisory services to the
                  Canadian Funds.

                  IVY MACKENZIE DISTRIBUTORS, INC. ("IMDI") is incorporated
                  under the laws of the State of Florida and is registered as a
                  broker-dealer under the Securities Exchange Act of 1934, as
                  amended, (the "34 Act"). IMDI is a member of the National
                  Association of Securities Dealers, Inc. ("NASD"). Under the
                  terms of exclusive underwriting agreements with Ivy Fund, IMDI
                  is entitled to sell the shares of the Funds. In this capacity,
                  IMDI distributes shares of the Funds through broker-dealers,
                  financial planners and registered investment advisers, and to
                  institutional investors such as retirement plans.

                  IVY MACKENZIE SERVICES CORP. ("IMSC") is incorporated under
                  the laws of the State of Florida. Prior to June 30, 2001,
                  IMSC, under transfer agency and shareholder services
                  agreements with Ivy Fund, served as transfer agent and
                  dividend paying agent for the Funds and provided certain
                  shareholder and shareholder-related services as requested by
                  the Funds. Effective June 30, 2001, the transfer agency
                  function was transitioned to a third party service provider,
                  PFPC Inc. ("PFPC"), and effective August 31, 2001, the Company
                  completed the process of de-registering IMSC as a transfer
                  agency with the SEC. IMSC currently serves as a liaison
                  between the Company and PFPC.

         The Company's revenues are generated principally from on-going
management fees and sub-advisory fees calculated as a percentage of average
daily net assets under management, and from fees related to services performed
for the Funds under various contracts for administrative, investment advisory,
distribution and fund accounting services. The level of net assets under
management is affected by gross sales, redemptions and changes in the market
value of the Funds' portfolios of investments. Gross sales and redemptions are a
function of a number of factors including relative performance and prevailing
market conditions. As the level of net assets under management fluctuates, so
does management, sub-advisory, distribution, and administrative services fee
revenue. Mutual funds generally experience higher levels of sales during and
after a period of above-average fund and market performance and higher levels of
redemptions during and after a period of below-average fund and market
performance.

         IMI seeks to achieve a variety of investment objectives on behalf of
the Funds, including capital appreciation, income, and growth and income. In
seeking to achieve such objectives, each Fund's portfolio reflects different
investment strategies. Funds that seek capital appreciation invest primarily in
equity



                                       6
<PAGE>

securities in a wide variety of international and U.S. markets; some seek broad
national market exposure, while others focus on narrower sectors such as
precious metals, emerging economies and technologies. Funds seeking income focus
on taxable money market instruments, fixed-income debt securities of
corporations and of the U.S. government and its agencies and instrumentalities
such as the Government National Mortgage Association, the Federal National
Mortgage Association and the Federal Home Loan Mortgage Corporation. Still
others focus on investments in particular countries and regions. A majority of
the assets managed by IMI are equity-oriented.

         IMI's investment style generally favors minimizing risk rather than
attempting to achieve a top performance ranking over a given period. Management
believes that, over the long term, consistent performance that is average to
above average best serves the Funds' shareholders and is most conducive to
developing loyal investors and repeat business from the Funds' distributors. The
chart below shows net assets under management and revenues by broad investment
objective.

<TABLE>
<CAPTION>

                                                             As of March 31,
                            ------------------------------------------------------------------------------

Net assets under management
(in thousands)                 2002             2001             2000             1999             1998
                            ----------       ----------       ----------       ----------       ----------
<S>                         <C>              <C>              <C>              <C>              <C>
Fixed Income                $  399,505       $  418,092       $  457,982       $  612,655       $  528,710
International Equity           828,385        1,487,454        5,452,002        3,416,113        3,863,332
Money Market                    20,217           25,939           22,117           28,435           23,529
U.S. Equity                  1,544,892        1,735,463        1,095,902          711,068          830,517
                            ----------       ----------       ----------       ----------       ----------
  Total net assets
     under management       $2,792,999       $3,666,948       $7,028,003       $4,768,271       $5,246,088
                            ==========       ==========       ==========       ==========       ==========
</TABLE>

<TABLE>
<CAPTION>

                                                      For the years ended March 31,
                              ---------------------------------------------------------------------------
Revenues (in thousands)         2002            2001              2000            1999             1998
                              -------          -------          -------          -------          -------
<S>                           <C>              <C>              <C>              <C>              <C>
Fixed Income                  $ 2,181          $ 2,256          $ 3,424          $ 4,377          $ 3,332
International Equity           14,691           30,680           46,223           51,444           49,816
Money Market                      180              243              240              243              197
U.S. Equity                     9,845           16,089            8,898            8,757            9,080
Other                             601            2,879            4,721            1,435            2,671
                              -------          -------          -------          -------          -------

  Total revenues              $27,498          $52,147          $63,506          $66,256          $65,096
                              =======          =======          =======          =======          =======
</TABLE>

         Shares of the Funds are generally sold at their respective net asset
value per share plus a sales charge, which varies depending on the type of fund
and the amount purchased. Purchases of Ivy Money Market Fund are not subject to
a sales charge. The Company has implemented a multi-class structure in response
to increasing competition from mutual fund managers offering funds without a
front-end sales charge. All Funds offer Class A, Class B and Class C shares and
all Funds other than Ivy Money Market Fund offer Advisor Class shares. Nine of
the sixteen Ivy Funds also offer Class I shares. Some classes are specifically
designed for institutional investors. See "MULTI-CLASS SHARE STRUCTURE" under
"NARRATIVE DESCRIPTION OF BUSINESS." In accordance with certain terms and
conditions described in the Prospectuses for such Funds, certain investors are
allowed to purchase shares at net asset value or at a reduced sales charge.
Investors may generally exchange their shares of a fund at net asset value for
shares within the same class of another fund within the same trust without the
payment of additional sales charges.

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

         All of the operations of the Company are carried on within a single
operating segment.




                                       7
<PAGE>

NARRATIVE DESCRIPTION OF BUSINESS

INVESTMENT MANAGEMENT AND ADVISORY SERVICES

         The Company, through its various subsidiaries described above, provides
investment management, marketing, distribution, accounting and other
administrative services to Ivy Fund as well as sub-advisory services to the
Canadian Funds. Such services are provided pursuant to various written
agreements.

         The investment management agreements for the Funds continue in effect,
after an initial two year period, for successive annual periods, provided the
continuance is specifically approved at least annually by a majority of votes
cast in person at a meeting of such Funds' Boards of Trustees called for that
purpose, or by a vote of the holders of a majority of the Funds' outstanding
voting securities. In either event, the continuance must be approved by a
majority of the Funds' trustees who are not parties to the agreement or
interested persons of the Funds or the Company, within the meaning of the 40
Act. The investment management agreements may be terminated upon 60 days'
written notice by a vote of the majority of the outstanding voting securities of
the affected Fund, by a vote of a majority of the Board of Trustees, or by IMI.
If there were to be a termination of a significant number of the investment
management agreements between the Funds and IMI, such termination would have a
material adverse impact upon the Company.

         As the manager of the Funds, IMI is responsible for monitoring the
services provided by third parties, supplying the Funds with office space and
administrative and clerical personnel, supervising the maintenance of books and
records, assisting in the preparation of tax and other governmental returns and
reports and responding to appropriate inquiries from persons such as fund
accounting personnel. The Company pays the salaries of personnel who serve as
officers of the Company, including the President and such other administrative
personnel as are necessary to conduct the Funds' day-to-day business operations.
The Funds generally pay their own expenses, such as legal and auditing fees,
shareholder reporting and board and shareholder meeting costs, SEC and state
registration fees and similar expenses. Generally, each Fund pays IMI a
management fee based upon the Fund's average daily net assets.

         IMI acts as advisor to all Funds other than Ivy Global Natural
Resources Fund and also acts as sub-advisor to the twenty-one Canadian Funds.
IMI has retained Henderson Investment Management Limited ("Henderson") to act as
sub-advisor to the portfolios of Ivy International Small Companies Fund and Ivy
European Opportunities Fund and Peter Cundill & Associates ("Cundill") to act as
sub-adviser to the portfolio of Ivy Cundill Global Value Fund. MFC acts as
advisor to Ivy Global Natural Resources Fund. Effective May 27, 2000, IMI
terminated its sub-advisory agreement with Northern Cross Investments Limited
("Northern Cross"), which previously acted as sub-advisor to Ivy International
Fund ("IIF"). IMI's investment management personnel are managing IIF.

         IMI (i) determines, with respect to the Funds it advises, which
investments the Funds will purchase and which investments will be sold; (ii)
prepares investment performance reports for the appropriate Trustees of the U.S.
Funds; and (iii) complies with information requirements from the Trustees of the
Ivy Fund with regard to such matters and filings made with the SEC and state
securities commissions. In its capacity as investment advisor, IMI performs
fundamental research and valuation analysis, industry and company research, and
company visits and inspections, and utilizes sources such as company public
records and activities, management interviews, company prepared information, and
other publicly available information, as well as analyses of suppliers,
customers and competitors. Fixed-income research includes economic analysis,
credit analysis and value analysis. The economic analysis includes an evaluation
of certain macro economic variables such as inflation, employment levels, and
industrial production and capacity utilization. Credit analysis researches the
creditworthiness of debt issuers and their individual short-term and long-term
debt issues. Yield spread differential analysis reviews the relative value of
market sectors that represent buying and selling opportunities.

         The Funds pay management fees to IMI ranging from 0.40% to 1.00% per
annum of a Fund's average daily net assets. IMI receives a sub-advisory fee from
MFC equal to 0.50% per annum of the first Cdn.$50 million of the average daily
net assets of each of the Canadian Funds, calculated daily on each day the TSE
is open for trading, except for those funds that are managed by multiple
portfolio managers, with



                                       8
<PAGE>

respect to which IMI receives a sub-advisory fee of 0.50% per annum of the
applicable percentage of each respective fund's average daily net assets. In
addition, IMI receives sub-advisory fees on a pool of funds representing the
consolidated net assets of the Canadian Funds in excess of Cdn. $50 million. As
of July 1, 2000, the sub-advisory fees on consolidated net assets were revised.
Further, as of July 1, 2000, IMI began sub-advising additional funds under a new
fee structure ("Group II Funds"). The following table reflects the fee
structures for both existing and new funds at the respective rates and time
periods.


<TABLE>
<CAPTION>

                                                          GROUP I FUNDS(1)    GROUP II FUNDS(2)
                                                          ---------------     -----------------
                       ASSET BASE                           CURRENT RATE         CURRENT RATE
                       ----------                           ------------         ------------
<S>                                                             <C>                  <C>
First Cdn. $50 million of average net assets per fund           0.50%                0.40%

Consolidated asset pool:
                                 first Cdn. $1.3 billion        0.50%                0.20%
                          in excess of Cdn. $1.3 billion        0.20%                0.20%

</TABLE>
---------------

(1)      Funds sub-advised as of June 30, 2000.
(2)      Funds sub-advised commencing after June 30, 2000.

         Under the Funds' management agreements, IMI pays all expenses incurred
by it in rendering management and advisory services to the Funds. See the table
of funds and investment objectives, which contains information on management and
sub-advisory fees paid to IMI in "THE PRODUCTS."

         The Funds bear their own operating expenses. However, IMI limits
certain Ivy Funds' total operating expenses (excluding 12b-1 Service and
Distribution Fees and taxes) to annual rates ranging from 0.85% to 1.95% of each
such Ivy Fund's average daily net assets, depending upon the size of the Funds.
These contractual expense limitations are determined annually and are disclosed
in the affected Funds' Prospectuses.


THE PRODUCTS

         As of March 31, 2002, the Company's groups of Funds consisted of
sixteen separate portfolios of Ivy Fund. The business affairs of Ivy Fund are
managed by a Board of Trustees, and the day to day administration of each is
carried out by the Company. Management of a Fund's portfolio is the
responsibility of its portfolio manager. Some Funds may be managed under a team
approach. The table below outlines information related to each Fund's portfolio
management, net asset value, management fees and year of introduction, as well
as the same information for the sub-advised Canadian Funds.

<TABLE>
<CAPTION>

                                                                           Net Assets
                                                                          as of March     Management Fee
                                                                            31, 2002        (% of Fund
            Name of Fund                                                  (In Millions     Average Daily      Year
          (Portfolio Manger)                  Investment Objective         of Dollars)(1)   Net Assets)    Introduced
          ------------------                  --------------------        ---------------  -------------   -----------

<S>                                      <C>                                  <C>             <C>              <C>
                                               INTERNATIONAL EQUITY FUNDS

Ivy European Opportunities Fund          Long-term capital growth by          99.9            1.00(2)          1999
(Stephen Peak, Henderson)                investing in the securities
                                         markets of Europe.

Ivy Global Fund (co-managed by Moira     Long-term capital growth.             7.4            1.00(3)          1991
McLachlan and Paul P. Baran, IMI)

Ivy Global Natural Resources Fund        Long-term growth.                    33.6            1.00(4)          1997
(Frederick Sturm, MFC)

Ivy Global Science & Technology Fund
(James W. Broadfoot, IMI)                Long-term capital growth.            23.2             1.00            1996

</TABLE>




                                       9
<PAGE>
<TABLE>
<CAPTION>

                                                                           Net Assets
                                                                          as of March     Management Fee
                                                                            31, 2002        (% of Fund
            Name of Fund                                                  (In Millions     Average Daily      Year
          (Portfolio Manger)                  Investment Objective         of Dollars)(1)   Net Assets)    Introduced
          ------------------                  --------------------        ---------------  -------------   -----------
<S>                                      <C>                                  <C>             <C>              <C>
Ivy International Fund                   Long-term capital growth.           369.5             1.00(5)         1986
(Moira McLachlan, IMI)

Ivy International Value Fund             Long-term capital growth.            69.5             1.00            1997
(Moira McLachlan, IMI)

Ivy International Small Companies Fund
(Henderson Global Investors smaller
companies team)                          Long-term growth.                    8.9              1.00(6)         1997

Ivy International Growth Fund (Moira     Long-term growth.                    0.4              1.00            2000
McLachlan, IMI)

Ivy Cundill Global Value Fund            Long-term capital growth.            2.4              1.00(7)         2000
(Cundill)(13)

                                                   U.S. EQUITY FUNDS

Ivy Growth Fund                          Long-term growth.                   175.7             0.85(8)         1960
(Co-managed by James W. Broadfoot and
Paul P. Baran, IMI)

Ivy US Blue Chip Fund                    Long-term growth.                    58.0             0.75            1998
(Paul P. Baran, IMI)

Ivy US Emerging Growth Fund
(James W. Broadfoot, IMI)                Long-term growth.                    64.5             0.85            1993


                                                 EMERGING MARKETS FUNDS

Ivy Pacific Opportunities Fund (Moira    Long-term capital growth.            11.3             1.00            1993
McLachlan)

Ivy Developing
Markets Fund                             Long-term growth.                    6.2              1.00            1994
(Moira A. McLachlan, IMI)


                                                   FIXED INCOME FUNDS

Ivy Bond Fund                            High level of current income.        54.5             0.50(9)         1985
(Richard A. Gluck, IMI)

Ivy Money Market Fund                    To obtain as high a level of         20.2             0.40            1987
(richard A. Gluck, IMI)                  current income as is
                                         consistent with the
                                         preservation of capital and
                                         liquidity.

</TABLE>

                                       10
<PAGE>
<TABLE>
<CAPTION>

                                                                           Net Assets
                                                                          as of March     Management Fee
                                                                            31, 2002        (% of Fund
            Name of Fund                                                  (In Millions     Average Daily      Year
          (Portfolio Manger)                  Investment Objective         of Dollars)(1)   Net Assets)    Introduced
          ------------------                  --------------------        ---------------  -------------   -----------
<S>                                      <C>                                  <C>             <C>              <C>
                                                    CANADIAN FUNDS

            IMI acts as sub-adviser to the following Canadian Funds, which are offered for sale only in Canada.

                                     (Net Assets are in millions of U.S. dollars)

Universal World Balanced RRSP Fund       Long-term capital growth by         143.3            0.50(10)         1994
(Co-managed by Richard A. Gluck and      pursuing both current income
Moira McLachlan, IMI)                    and capital gains, generally
                                         through international fixed
                                         income and equity derivative
                                         securities.

Universal World Income RRSP Fund
(Richard A. Gluck, IMI)                  Long-term capital growth.           219.0            0.50(10)         1975

Universal World Growth RRSP Fund         Long-term capital growth.           120.0            0.50(10)         1994
(Moira McLachlan, IMI)

Universal Americas Fund
(Co-managed by Paul P. Baran and Moira   Long-term capital growth.            13.6(11)        0.50(10)         1978
McLachlan, IMI)

Universal U.S. Emerging Growth Fund      Long-term capital growth.           104.5            0.50(10)         1991
(James W. Broadfoot, IMI)

Universal World Science and Technology   Long-term capital growth.            82.5(12)        0.50(10)         1996
Fund
(Co-managed by three portfolio
managers from MFC, IMI and Henderson)

Universal Select Managers Fund
(Co-managed by five portfolio managers   Long-term capital growth.           754.3            0.50(10)         1998
from MIMI, Henderson and Cundill 13)

Universal World Value Fund (Co-managed                                        14.2(14)        0.50(10)         1997
by Paul P. Baran and Moira McLachlan,    Long-term capital
IMI)                                     appreciation.

Mackenzie Yield Advantage Fund           Above-average income with the        9.7(15)         0.50(10)         1999
(Richard Gluck, IMI)                     potential for capital growth.

Universal U.S. Blue Chip                 Long-term capital growth.           230.8            0.50(10)         1999
Fund
(Paul P. Baran, IMI)

Universal Internet Technologies Fund     Long-term capital growth.            10.5(16)        0.40(10)         2000
(Keith Maher, IMI)

</TABLE>



                                       11
<PAGE>
<TABLE>
<CAPTION>

                                                                           Net Assets
                                                                          as of March     Management Fee
                                                                            31, 2002        (% of Fund
            Name of Fund                                                  (In Millions     Average Daily      Year
          (Portfolio Manger)                  Investment Objective         of Dollars)(1)   Net Assets)    Introduced
          ------------------                  --------------------        ---------------  -------------   -----------
<S>                                      <C>                                  <C>             <C>              <C>
Universal Communications Fund
(co-managed by three portfolio           Long-term capital growth.            1.8(12)         0.40(10)         2000
managers from IMI, MFC and Henderson)

Mackenzie Universal Select Managers
USA Capital Class (co-managed by five
portfolio managers from IMI, Alliance,   Long-term capital growth.            4.6(11)         0.40(10)         2000
Salomon and Credit Suisse) 17

Mackenzie Universal US Blue Chip         Long-term capital growth.            5.5             0.40(10)         2000
Capital Class (Paul P. Baran, IMI)

Mackenzie Universal US Emerging Growth   Long-term capital growth.            2.8             0.40(10)         2000
Capital Class (James W. Broadfoot, IMI)

Mackenzie Universal Select Managers
Capital Class (co-managed by five
portfolio managers from IMI, Henderson   Long-term capital growth.           16.4             0.40(10)         2000
and Cundill)

Mackenzie Universal Select Managers
International Capital Class
(co-managed by five portfolio managers   Long-term capital growth.            1.0             0.40(10)         2000
from IMI, MFC, Henderson and Robert
Fleming)

Mackenzie Universal Communications
Capital Class (co-managed by three
portfolio managers from IMI, MFC and     Long-term capital growth.            0.3(12)         0.40(10)         2000
Henderson)

Mackenzie Universal Diversified Equity
Capital Class 18(co-managed by Paul P.   Long-term capital                    0.4(14)         0.40(10)         2000
Baran and Moira McLachlan, IMI)          appreciation.

Mackenzie Universal Internet
Technologies Capital Class (Keith        Long-term capital growth.            1.4(16)         0.40(10)         2000
Maher, IMI)

Mackenzie Universal World Science and    Long-term capital growth.            3.1(12)         0.40(10)         2000
Technology Capital Class (co-managed
by three portfolio managers form IMI,
MFC and Henderson)
</TABLE>
-----------------------

(1)      Excludes net assets of non-Canadian Fund sub-advised assets.

(2)      Reduced to 0.85% for net assets over $250 million but less than $500
         million and further reduced to 0.75% for net assets over $500 million.
         IMI retains 0.78%; Henderson, as sub-adviser, is paid 0.22%. From
         November 1, 2001 through October 31, 2002, IMI has contractually agreed
         to waive 0.12% of the total 1.00% in annual management fees to be
         deducted from the 0.78% remuneration to IMI.

(3)      Reduced to 0.75% for average daily net assets over $500 million.

(4)      IMI is paid 0.50%; MFC is paid 0.50%.




                                       12
<PAGE>

(5)      Reduced to 0.90% for net assets over $2.0 billion, further reduced to
         0.80% for net assets over $2.5 billion and further reduced to 0.70% for
         net assets over $3.0 billion.

(6)      IMI retains 0.78%; Henderson, as sub-adviser, is paid 0.22%.

(7)      IMI retains 0.50%; Cundill, as sub-adviser, is paid 0.50%.

(8)      Reduced to 0.75% for average daily net assets over $350 million.

(9)      Reduced to 0.40% for average daily net assets over $500 million.

(10)     These fees are paid according to a graduated scale. For details see the
         "INVESTMENT MANAGEMENT AND ADVISORY SERVICES" section under "NARRATIVE
         DESCRIPTION OF BUSINESS."

(11)     Effective June 8, 2002, the net assets of Universal Americas Fund were
         acquired by Mackenzie Universal Select Managers USA Capital Class Fund.

(12)     Effective May 25, 2002, the net assets of Universal World Science and
         Technology Fund, Universal Communications Fund and Mackenzie Universal
         Communications Capital Class Fund were acquired by Mackenzie Universal
         World Science and Technology Capital Class Fund.

(13)     Cundill Investment Research, Inc., Canada

(14)     Effective June 8, 2002, the net assets of Universal World Value Fund
         were acquired by Mackenzie Universal Diversified Equity Capital Class
         Fund.

(15)     Effective January 18, 2002 the net assets of Universal World High Yield
         Fund were acquired by Mackenzie Yield Advantage Fund.

(16)     Effective June 8, 2002, the net assets of Universal Internet
         Technologies Fund were acquired by Mackenzie Universal Internet
         Technologies Capital Class Fund, which effective June 8, 2002 changed
         its name to Universal Emerging Technologies Capital Class Fund.

(17)     Alliance Capital Management Corporation, Salomon Smith Barney and
         Credit Suisse Asset Management, LLC.

(18)     Effective January 11, 2002, the Fund changed its name from Mackenzie
         Universal World Value Capital Class.


         VOLUNTARY REIMBURSEMENT OF OPERATING EXPENSES

         In connection with a review of the overall management relationship
between IIF and the Company (including affiliates) in December 2001, the Company
determined to make and recorded a voluntary reimbursement to IIF's operating
expenses in the amount of $400,000

         MULTI-CLASS SHARE STRUCTURE

         In October 1993, Ivy Fund began offering a multi-class structure that
allows investors to choose an appropriate purchase option based on the amount
purchased and the anticipated duration of the investment. MIMI implemented this
multi-class structure in response to increasing competition from mutual fund
managers offering funds without a front-end sales charge. The multi-class share
structure allows investors to choose between paying a front-end sales charge at
the time of purchase, or not paying a front-end sales charge at the time of
purchase but instead paying a Contingent Deferred Sales Charge ("CDSC") on
redemption. Prior to October 1993, Ivy Fund offered Class A shares only, which
normally bear a front-end sales charge payable by the investor at the time of
purchase and are subject to a 12b-1 Service Fee at an annual rate of up to 0.25%
of a Fund's average daily net assets attributable to its Class A shares.

         A 12b-1 Fee is a fee permitted by Rule 12b-1 under the 40 Act, which a
mutual fund may pay in connection with the distribution of its shares, for costs
such as advertising and commissions paid to broker-dealers. The portion of the
12b-1 Fee payable to a broker-dealer as a distribution fee in connection with
the distribution of a mutual fund's shares is referred to as a 12b-1
Distribution Fee. This fee is limited annually to 0.75% of the mutual fund's
average daily net assets. An additional portion of the 12b-1 Fee, referred to as
a 12b-1 Service Fee, is limited to 0.25% of the mutual fund's average daily net
assets. It is paid to broker-dealers and other sales professionals for their
services in providing ongoing information and assistance to investors.




                                       13
<PAGE>

         Class B shares of the Ivy Funds became available for sale starting in
October 1993. No front-end sales charge on such shares is payable by the
investor at the date of purchase, but there is a deferred selling commission of
4% of the sale price paid by MIMI to the selling broker-dealer when the shares
are purchased and a declining CDSC payable by the investor if the shares are
redeemed within six years from the date of purchase. In addition, Class B shares
are subject to 12b-1 Service and Distribution Fees at a combined annual rate of
up to 1.00% of a Fund's average daily net assets attributable to its Class B
shares. Approximately eight years after the original date of purchase, Class B
shares convert automatically to Class A shares.

         In March 1999, MIMI sold a portion of the Class B deferred selling
commission asset. See the sub-section titled "DISTRIBUTION SERVICES" below for
more information.

          Class C shares became available for sale starting in May 1996. There
is no front-end sales charge payable by the investor at the date of purchase,
but there is a deferred selling commission of 1% of the sale price paid by MIMI
to the selling broker-dealer when the shares are purchased. A CDSC of 1% is
payable by the investor if the shares are redeemed within one year from the date
of purchase. Class C shares are subject to 12b-1 Service and Distribution Fees
at a combined annual rate of up to 1.00% of the mutual fund's average daily net
assets attributable to its Class C shares. The 12b-1 Service and Distribution
Fees are retained by IMDI in year one; for all subsequent years, the fees are
paid to the selling broker-dealer. Class C shares do not have a conversion
feature.

         Advisor Class shares became available for sale starting in January
1998. The shares are offered at net asset value without the imposition of a
front-end sales charge or CDSC. In addition, Advisor Class shares are not
subject to Rule 12b-1 Fees. Advisor Class shares are offered only to certain
investors, such as those with an account over which a financial planner, trust
company or registered investment adviser has investment discretion, and where
the investor pays such person as compensation for its advice and other services
an annual fee on the net assets in the account. Currently, Advisor Class shares
are offered by all the Funds other than Ivy Money Market Fund.

         Class I shares became available for sale starting in October 1994.
Class I shares are offered only to institutions and are not subject to an
initial sales charge or CDSC, nor to ongoing 12b-1 Service or Distribution Fees.
Class I shares also bear lower fees than Class A, Class B and Class C shares.
Currently, Class I shares are offered by nine of the Ivy Funds.

ADMINISTRATIVE, TRANSFER AGENT AND FUND ACCOUNTING SERVICES

         Under administrative services agreements, MIMI provides administrative
services to the Funds including, but not limited to, maintenance of registration
and qualification of Fund shares under state Blue Sky laws, preparation of
federal, state and local income tax returns and preparation of financial and
other information for prospectuses, securities regulatory documents and returns
and periodic reports to shareholders. The administrative service agreements for
the Funds continue in effect, after an initial two year period, for successive
annual periods, provided that such continuance is specifically approved at least
annually by a majority of votes cast in person at a meeting the Funds' Boards of
Trustees called for that purpose, or by a vote of the holders of a majority of
the Funds' outstanding voting securities. In either event, the continuance must
be approved by a majority of the Funds' trustees who are not parties to the
agreement or interested persons, within the meaning of the 40 Act, of the Funds
or the Company. The administrative service agreements may be terminated upon 60
days written notice by a vote or written consent of a majority of the Funds'
Board of Trustees, or by MIMI. To date, no administrative services agreements of
the Company with the Funds have been terminated other than in connection with
Fund closings. See "INVESTMENT MANAGEMENT AND ADVISORY SERVICES" under
"NARRATIVE DESCRIPTION OF BUSINESS."

         Under fund accounting services agreements, MIMI also provides certain
accounting and pricing services to the Funds. The fund accounting services
agreements for the Funds continue in effect for successive annual periods,
providing such continuance is specifically approved at least annually by a
majority of votes cast in person at a meeting the Funds' Boards of Trustees
called for that purpose, or by a




                                       14
<PAGE>

vote of the holders of a majority of the Funds' outstanding voting securities.
In either event, the continuance must be approved by a majority of the Funds'
trustees who are not parties to such agreement or interested persons, within the
meaning of the 40 Act, of the Funds or the Company. The fund accounting services
agreements may be terminated upon 90 days written notice by a vote or written
consent of a majority of the Board of Trustees, or by MIMI. To date, no fund
accounting services agreements of the Company with the Funds have been
terminated other than in connection with Fund closings.

         For the administrative services provided to the Funds as described
above, all Ivy Funds pay a monthly fee at an annual rate of 0.10% of the average
daily net assets of the applicable Fund (except with respect to Class I shares).
All Ivy Funds pay a monthly fee at an annual rate of 0.01% of the average daily
net assets for Class I shares. For accounting and pricing services, MIMI
receives a fee ranging from $1,000 to $6,500 per month based on the net asset
value of each of the Ivy Funds at the preceding month end. MIMI is also
reimbursed by the Funds for certain out-of-pocket expenses.

         Prior to June 30, 2001, IMSC served as transfer agent and dividend
paying agent for the Funds and provided certain shareholder and
shareholder-related services as required by the Funds. For transfer agent
services, IMSC received a per shareholder account fee ranging from $20 to $22
per year. The shareholder account fee received by IMSC for Class I shares was
$10.25. In addition, the Funds paid IMSC a monthly fee at an annual rate of
$4.86 per account that was closed. IMSC was also reimbursed by the Funds for
certain out-of-pocket expenses. As part of the Company's restructuring plan
initiated in the fourth quarter of the year ended March 31, 2001, the Company
transitioned the transfer agency function to a third party service provider,
PFPC. Each Fund now pays PFPC an annual rate of $17.00 per shareholder account
fee for transfer agency services and an annual rate of $3.60 per account fee for
closed accounts. See "RESTRUCTURING" under "NARRATIVE DESCRIPTION OF BUSINESS."

DISTRIBUTION SERVICES

         IMDI serves as principal underwriter and exclusive distributor of the
Funds and distributes their shares on a continuous basis in every state in the
U.S. IMDI is not required to sell any specific amount of Fund shares. The Funds'
shares are sold primarily through a large network of independent participating
securities dealers. The Funds' shares are offered to individual investors,
qualified groups, trustees, IRA and profit sharing or money purchase plans,
employee benefit plans, trust companies, bank trust departments and
institutional investors.

         IMDI is assisted in its distribution efforts by a national team of six
regional representatives who market the Funds to the broker-dealer, financial
planner and registered investment adviser sales channels, supported by a
national sales manager and a team of internal sales personnel, all of whom are
employed by the Company. The broker-dealer and financial planner sales channels
are the traditional channels through which load mutual funds are sold to
investors. IMDI has dealer agreements with approximately 1,081 U.S.
broker-dealer firms who distribute the Funds' shares through their regional
offices. For the year ended March 31, 2002, two firms were responsible for 47%
of the Company's mutual fund sales. None of the firms are under any obligation
to sell a specific amount of shares of the Funds and some also sell shares of
mutual funds that they sponsor and that are sponsored by unaffiliated
organizations.

         Upon receipt of a purchase order from a broker-dealer, IMDI purchases
shares from the Funds at net asset value per share and re-sells them to the
broker-dealer who in turn sells them to the investor at the public offering
price. As an underwriting fee, IMDI receives a portion of the difference between
the purchase price it paid to the Funds and the public offering price paid by
the investor. The underwriting fee retained by IMDI is typically 15 - 20% of the
front-end sales charge paid by the investor, with the remaining portion being
retained by the selling broker-dealer.

         Over the years, MIMI has gained access to the mutual fund sales network
created by the emergence of registered investment advisers and financial
planners. This network consists of independent registered investment advisers
and financial planners who work with the traditional broker-dealer distribution
network in selling funds to their clients. Firms such as Charles Schwab & Co.,
Inc. and Fidelity Investment Advisor Group act as clearing houses for thousands
of U.S. mutual funds enabling



                                       15
<PAGE>

smaller, independent registered investment advisers and financial planners to
have access to mutual fund groups previously sold only by broker-dealers.
Management of MIMI believes that MIMI was one of the first U.S. mutual fund
managers whose funds impose front-end sales charges or CDSCs to actively
participate in this expanding network and has established selling arrangements
with many U.S. registered investment advisers and financial planner groups.

         Under the terms of the distribution plans between IMDI and the Funds,
IMDI is entitled to receive 12b-1 Distribution Fees from the Funds for
distribution services in respect of certain of the classes of shares offered by
the Funds. The plans are established for an initial term of one year and
thereafter must be approved annually by the Funds' Board of Trustees and by a
majority of disinterested Trustees. All such plans are subject to termination at
any time by a majority vote of the disinterested Trustees or by the Funds'
shareholders. The plans permit the Funds to bear certain expenses relating to
the distribution of their shares.

         IMDI is entitled to be reimbursed by the Funds for 12b-1 Service Fees
paid by it to broker-dealers up to an amount equal to 0.25% of the average daily
net assets of each Fund's Class A shares. This fee is accrued daily and IMDI is
reimbursed monthly.

         Each Fund pays IMDI a 12b-1 Fee at an annual rate of 1.00% of the
average daily net assets of the Class B and Class C shares of the Fund, which is
comprised of a 12b-1 Distribution Fee of 0.75% of the average daily net assets
paid to IMDI as reimbursement for various promotional and sales-related expenses
incurred, and a 12b-1 Service Fee of 0.25% of the average daily net assets that
IMDI pays to the broker-dealer for account maintenance and shareholder services.
This fee is accrued daily and IMDI is paid monthly.

         The Company is entitled to receive a CDSC on the redemption of certain
Class A shares that are sold at net asset value ("NAV") and for which an
up-front commission was paid by the Company. The CDSC applies to shares that are
redeemed within two years of the end of the month in which they were purchased.
The Company is also entitled to receive a CDSC on the redemption of Class B and
Class C shares depending on when they are redeemed. For Class B shares, the CDSC
ranges from a maximum of 5% in the first year of purchase, and declines over six
years to 1%. There is no CDSC for Class B shares held more than six years. For
Class C shares, there is a 1% CDSC for redemptions during the first year after
purchase.

         MIMI pays the up-front selling commission to broker-dealers on sales of
Class B and Class C shares. The up-front selling commission is 4% and 1% for
Class B and Class C, respectively. The Company may pay an up-front commission
ranging from 0.25% to 1.00%, depending upon the purchase amounts, on certain
Class A shares sold at NAV. The Company funds these up-front selling commissions
from its cash flows from operations, including CDSC and 12b-1 Distribution Fees.

         In March 1999, the Company sold a portion of the deferred selling
commissions related to Class B shares to an unrelated third party (the
"Purchaser"). The sale resulted in the Company receiving cash proceeds of
$21,115,000 and recording a net gain of approximately $41,000 after recording
expenses incurred in connection with the transaction. The Purchaser will receive
12b-1 Distribution Fees and any CDSC upon redemption of the asset sold. The sale
of the deferred selling commissions provided cash to the Company for general
corporate purposes.

         As of March 31, 2002, there were approximately 85,400 shareholder
accounts in the Funds.

CUSTODY AND BROKERAGE

         Custody of individual securities is maintained by banks, trust
companies, brokerage firms or other custodians as appointed by the Company. The
Company generally has the discretion to select brokers or dealers to be utilized
to execute transactions for the Funds' accounts.




                                       16
<PAGE>

NUMBER OF EMPLOYEES

       As of March 31, 2002, the Company had 81 employees, including fifteen
investment professionals, of whom four are portfolio managers, seven are
research analysts and four are traders. The average period of employment of
these professionals with the Company is approximately five years and their
average investment experience is approximately sixteen years. The Company
considers its employee relations to be good. See "RESTRUCTURING" below.

RESTRUCTURING

         During the fourth quarter of the year ending March 31, 2001, the
Company recorded a $3,032,000 restructuring charge to cover costs associated
with the plan of outsourcing the transfer agency operations and downsizing the
sales, marketing and other various support functions, which resulted in a 41%
decrease in the workforce. During the same period, the Company made payments
totaling approximately $1,262,000 for these costs. For the year ended March 31,
2002, the Company made payments totaling approximately $1,545,000. The Company
anticipates that the remaining restructuring costs of approximately $225,000,
which primarily relate to lease obligations, will be paid from funds provided
from operations during the six-month period ending September 30, 2002.

RISK FACTORS AND CAUTIONARY STATEMENTS

         COMPETITION

         The financial services industry is highly competitive and has
increasingly become a global industry. There are over 8,300 open-end investment
companies of varying sizes, investment policies and objectives whose shares are
being offered to the public in the U.S. Given the large number of competitors in
the U.S., the Company has focused its efforts on becoming an investment
specialist with a worldwide perspective offering mutual funds with an emphasis
on international and emerging growth investing. With this focus, the Company
considers that it has narrowed the competitive field to a certain extent as it
competes primarily with mutual fund managers that provide specialty mutual
funds, such as international and emerging market funds, to investors. As of
March 31, 2002, the Company's market share of monthly average net assets under
management was 0.01%. However, the Company's market share of international and
emerging market fund monthly average net assets under management was 0.15%.

         The Company competes with the financial services and other investment
alternatives offered by stock brokerage and investment banking firms, insurance
companies, banks, savings and loan associations and other financial
institutions. Many of the Company's competitors have substantially greater
resources than the Company. In addition, there has been a trend of consolidation
in the mutual fund industry, which has resulted in stronger competitors. Such
competition could negatively impact the Company's market share, revenues and
operating results.

         DISTRIBUTION

         Securities dealers, whose large retail distribution systems play an
important role in the sale of shares of the Funds, also sponsor competing
proprietary mutual funds. To the extent that these firms limit or restrict the
sale of Ivy Funds through their brokerage systems in favor of their proprietary
mutual funds, future sales may be negatively impacted and the Company's revenues
might be adversely affected. As competition increases in the investment
management industry, greater demands are placed on existing distribution
channels, which has caused distribution costs to increase.

         As investor interest in the mutual fund industry has increased,
competitive pressures have increased on sales charges of broker-dealer
distributed funds. The Company believes that, although this trend will continue,
a significant portion of the investing public still relies on the services of
the broker-dealer community, particularly during weaker market conditions.
However, in response to competitive pressures or for other similar reasons, the
Company might be forced to lower or further adjust sales charges, substantially
all of which are paid by the Company to broker-dealers and other financial
intermediaries. The reduction in such sales charges paid to broker-dealers could
make the sale of shares of



                                       17
<PAGE>

the Funds somewhat less attractive to the broker-dealer community, which could
in turn have a material adverse effect on the Company's revenues.

         ASSET MIX

         As discussed above, the Company's revenues are derived primarily from
investment management activities. Broadly speaking, the direction and amount of
change in the net assets of the Funds depend upon two factors: (1) the level of
sales of shares of the Funds as compared to redemptions of the shares of the
Funds; and (2) the increase or decrease in the market value of the securities
owned by the Funds. The Company is subject to an increased risk of volatility
from changes in the global equity markets. Despite this volatility, management
believes that in the long run the Company is more competitive as a result of
greater diversity of global investments available to its customers.

         Many things affect market values, including the general condition of
national and world economics and the direction and volume of changes in interest
rates and/or inflation rates. Fluctuations in interest rates and in the yield
curve will have an effect on fixed-income net assets under management as well as
on the flow of monies to and from fixed-income funds and, as a result, will
affect the Company's revenues from such funds. The effects of the foregoing
factors on equity funds and fixed-income funds often operate inversely and it
is, therefore, difficult to predict the net effect of any particular set of
conditions on the level of net assets under management.

         Certain portions of the Company's managed portfolios are invested in
various securities of corporations located or doing business in developing
regions of the world, commonly known as emerging markets. These portfolios and
the Company's revenues derived from the management of such portfolios are
subject to significant risks of loss from, among other factors, unfavorable
political and diplomatic developments, currency fluctuations, social
instability, changes in governmental policies, expropriation, nationalization,
confiscation of assets and changes in legislation relating to foreign ownership.
Foreign trading markets, particularly in some emerging market countries, are
often smaller, less liquid, less regulated and significantly more volatile.

         INVESTOR SENTIMENT FOR INTERNATIONAL INVESTING

         Given the risk associated with investing in foreign and emerging
markets, investors may from time to time be less supportive of investing in
international funds than in U.S. equity or fixed income funds and sales of those
Funds, which invest in these areas, may decrease.

         IVY INTERNATIONAL FUND

         As of March 31, 2002, 13% of the net assets under the Company's
management was represented by IIF. A decline in the performance of IIF could
have an effect on further redemptions of its shares. Net redemptions in IIF for
the Company's fiscal year ended March 31, 2002 were $323 million, based on sales
and redemptions of $153 million and $476 million, respectively.

         ABSENCE OF PUBLIC TRADING MARKET

         MFC owns 86% of the issued and outstanding common shares of MIMI as of
March 31, 2002. The shares have been thinly traded. Further, the number of
common shares of MIMI held by persons other than MFC are very small by market
standards and this may have an adverse impact on liquidity and trading of the
common shares.

         RELATIONSHIP WITH MFC

         For the year ended March 31, 2002, 26% of MIMI's consolidated revenues
were derived from fees received from MFC for sub-advisory services provided to
the Canadian Funds. Any change in these sub-advisory arrangements between MFC
and MIMI could have an adverse effect on MIMI's revenues.



                                       18
<PAGE>

Management of MIMI understands that MFC intends to continue MIMI's role as a
sub-adviser, subject to MIMI's level of performance and MFC's obligations as
manager of the Canadian Funds.

         RELIANCE ON KEY EMPLOYEES AND SUB-ADVISORS

         MIMI takes a team approach to the management in some of the Funds'
portfolios and uses sub-advisors for four of its Funds. It is possible that
levels of investment in a Fund may be impacted should the principal portfolio
manager or sub-advisor cease managing that Fund.

REGULATORY ENVIRONMENT

         Virtually all aspects of the Company's business are subject to various
federal and state laws and regulations. As discussed above, the Company and its
subsidiaries are registered with federal and state governmental agencies. These
supervisory agencies have broad administrative powers, including the power to
limit or restrict the Company from carrying on its business if it fails to
comply with applicable laws and regulations. In the event of non-compliance, the
possible sanctions that may be imposed include suspending individual employees,
limiting the Company's ability to engage in business for specified periods of
time, revoking the investment advisor or broker-dealer registrations and
imposing censures and fines.

         The Company's officers, directors and employees may from time to time
own securities that are also held by the Funds. The Company's internal policies
with respect to individual investments by certain employees, including officers
and directors who are employed by the Company, require prior clearance and
reporting of certain transactions and restrict or prohibit other transactions so
as to reduce the possibility of conflicts of interest. The Company's compliance
procedures comply with recent amendments to Rule 17j-1 under the 40 Act.

         To the extent that existing or future regulations cause a reduction in
sales of Fund shares or investment products or impair the investment performance
of the Funds or such other investment products, the Company's aggregate net
assets under management and its revenues might be adversely affected. Changes in
regulations affecting free movement of international currencies might also
adversely affect the Company.

         Since 1993, the NASD Conduct Rules have limited the amount of aggregate
sales charges which may be paid in connection with the purchase and holding of
investment company shares sold through brokers. The effect of the rule might be
to limit the amount of fees that could be paid pursuant to a Fund's Rule 12b-1
distribution plan to IMDI. Such limitations would apply in a situation where a
Fund has no, or limited, new sales for a prolonged period of time.

         Under the 40 Act, each of the Funds must file annually a current
Prospectus and Statement of Additional Information with, and pay registration
fees to, the SEC. The public may read and copy any material filed with the SEC
at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. Information on the operation of the Public Reference Room may be obtained
by calling the SEC at 1-800-SEC-0330. Additionally, each of the Funds must pay
registration fees in some or all of the states.

         Under the 40 Act and rules thereunder, each of the Funds is required to
obtain shareholder approval for certain changes in its operations, including
changes to its investment advisory contracts, a change in control of its
adviser, a material amendment to a Rule 12b-1 distribution plan or a change in
any fundamental investment objective or other fundamental policies. The 40 Act
also requires that each of the Funds' investment advisory contracts be annually
approved by the Funds' Board of Trustees. Absent approval, these contracts,
including the fee revenues from these contracts, would terminate.

         As a registered broker-dealer, IMDI is subject to net worth and capital
requirements, bonding requirements and detailed rules of practice, as well as
general anti-fraud provisions.




                                       19
<PAGE>

ITEM 2. PROPERTIES.

         The Company's corporate, research and administrative offices are
located in leased premises, which consist of the following:

o        Approximately 40,000 square feet located at First Union Plaza, 925
         South Federal Highway, suite 600, Boca Raton, Florida 33432, for an
         average base rent per year of approximately $969,000. The lease expires
         in 2013.

o        Approximately 5,300 square feet located at 1239-1287 East Newport
         Center Drive, Suite 106 and 205, Deerfield Beach, Florida 33442, for
         rent per year of approximately $98,000. The lease expires in 2003.

         The Company's headquarters are located in the Boca Raton facility.

         All premises are leased from unaffiliated entities.

ITEM 3. LEGAL PROCEEDINGS.

         There are currently no legal proceedings pending to which the Company
is a party or of which any of its property is the subject. Further, there are no
material legal proceedings to which any director, officer, or affiliate of the
Company or any associate thereof is a party adverse to the Company. There are no
material administrative or judicial proceedings pending or known to be
contemplated by any governmental authorities.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         No matters were submitted to a vote of the Company's security holders
during the fourth quarter of the Company's most recently completed fiscal year.


ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

         Set forth below are the names and ages of the executive officers of the
Company, and a description of the positions and offices each holds with the
Company and its significant subsidiaries.

                                           Positions With the Company and
         Name                       Age    Its Significant Subsidiaries
         ----                       ---    -------------------------------------

         Keith J. Carlson           Age    President, Chief Executive Officer,
                                    46     and Director since July 1999. Prior
                                           thereto, Executive Vice President and
                                           Chief Operating Officer from December
                                           1997 to July 1999. Senior Vice
                                           President from August 1989 to
                                           December 1997. Director from April
                                           1985 to October 1996. Director of
                                           IMDI since June 1993. President and
                                           Chief Executive Officer of IMDI since
                                           December 1994. Chairman of IMI since
                                           January 1992. Director of IMI since
                                           November 1992. Senior Vice President
                                           of IMI since January 1992. Chairman
                                           and Director of IMSC since June 1993.
                                           President of IMSC from June 1993 to
                                           February 1996 and from February 2001
                                           to the




                                       20
<PAGE>

                                           present. Chairman and Trustee of Ivy
                                           Fund since July 1999. Prior thereto,
                                           President of Ivy Fund from December
                                           1996 to July 1999.


         James W. Broadfoot III     Age    Senior Vice President and Portfolio
                                    59     Manager since August 1990. Director
                                           since June 1995. President, IMI since
                                           October 1997. President and Trustee
                                           of Ivy Fund since July 1999. Prior
                                           thereto, Vice President of Ivy Fund
                                           since June 1996. Director of IMDI and
                                           IMSC since January 2001.


         Beverly J. Yanowitch       Age    Chief Financial Officer since January
                                    52     2000. Vice President since December
                                           1999. Treasurer since September 2000.
                                           Senior Vice President of IMDI since
                                           October 1997 and Vice President of
                                           IMDI since December 1993. Treasurer
                                           of IMDI since September 2000. Senior
                                           Vice President of IMI and IMSC since
                                           September 2000. Treasurer of IMI and
                                           IMSC since September 2000. Prior
                                           thereto, Controller from January 1993
                                           to December 1999. Treasurer of Ivy
                                           Fund since January 2001.


         Paul P. Baran              Age    Vice President since December 1999.
                                    51     Portfolio Manager and Senior Vice
                                           President of IMI since July 1998.
                                           Prior thereto, Senior Vice President
                                           and Chief Investment Officer for
                                           Central Fidelity National Bank from
                                           September 1987 to June 1998.


         Thomas H. Bivin, Jr.     Age      Vice President since September 1999.
                                   63      Executive Vice President and National
                                           Sales Manager for Ivy Mackenzie
                                           Distributors, Inc. since September
                                           1999. Senior Vice President and
                                           Wholesaler of Ivy Mackenzie
                                           Distributors, Inc. from July 1994 to
                                           September 1999.

                                     PART II


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The Company's common shares are traded on the TSE under the ticker
symbol MCI. The current bylaws of the TSE require every TSE listed company
incorporated under the laws of Canada or any province to disclose to
shareholders, on an annual basis, its corporate governance practices. That
statement of corporate governance practices must indicate whether the Company
complies with the guidelines for effective corporate governance contained in the
TSE Guidelines and, if not, the reasons for the differing practices.

         The following table sets forth the high and low sales prices for the
Company's common stock in U.S. dollars. The prices were obtained from the TSE in
Canadian dollars and translated at each respective day's spot rate to U.S
dollars.


                                       21
<PAGE>
<Table>
<Caption>
                                       2002 Fiscal Year                             2001 Fiscal Year
                                    ----------------------                       -----------------------
   Quarter                           High             Low                        High               Low
   -------                          -----            -----                       -----             -----
   <S>                              <C>              <C>                         <C>               <C>
   April-June                       $5.77            $4.28                       $6.48             $4.76
   July-September                    5.15             2.54                        5.73              4.98
   October-December                  3.60             2.45                        6.15              4.11
   January-March                     4.69             3.41                        5.98              4.19
</Table>

         MIMI's stock option plan was adopted by the Board of Directors on
August 31, 1994 (the "1994 Plan"). In accordance with the rules of the TSE,
effective September 9, 1999, MIMI amended the 1994 Plan to fix the maximum
number of shares issuable under the 1994 Plan at 3,114,220 common shares,
representing 10% of the issued and outstanding common shares of MIMI's then
outstanding shares less the common shares issued on the exercise of options
within the preceding year. On March 31, 2002, there were 1,322,000 options
outstanding.

         There are approximately 145 registered shareholders of the Company. As
of March 31, 2002, MFC was the primary shareholder holding 15,987,910 shares, or
85.7% of the Company.

          In the past, MIMI has retained its earnings for use in the operation
and expansion of its business. Commencing in fiscal year 2001, it began paying a
semi-annual cash dividend of $0.01 per common share. Total common share
dividends paid during the year ended March 31, 2002 approximated $374,000.

ITEM 6. SELECTED FINANCIAL DATA.

         The tables below indicate selected consolidated financial information
for MIMI as of and for each of the five years in the period ended March 31,
2002. The selected consolidated financial data have been derived from the
Company's consolidated financial statements. The following data should be read
in conjunction with "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS" and the Company's Consolidated Financial Statements
and notes thereto included elsewhere in this document. See Note 2 to the
Consolidated Financial Statements for information regarding the restatements and
applicable periods. (Note: all figures are in US dollars except where otherwise
stated.)


<TABLE>
<CAPTION>

                                                              For the year ended March 31,
                                ---------------------------------------------------------------------------------------
                                   2002                2001               2000               1999              1998
                                ----------          ----------         ----------         ----------         ----------
                                                   (In thousands of dollars, except per share amounts)
                                                  (as restated)      (as restated)      (as restated)

<S>                             <C>                 <C>                <C>                <C>                <C>
Revenues                        $   27,498          $   52,147         $   63,506         $   66,256         $   65,096
Net (loss) income                     (485)              2,174              5,678              8,318              9,526
Per common share:
 Net (loss) income -
basic                                (0.03)               0.12               0.30               0.43               0.51
 Net (loss) income -
diluted                              (0.03)               0.12               0.30               0.43               0.49
 Dividends declared and
paid                                  0.02                0.02               0.00               0.00               0.00

</Table>


                                       22
<PAGE>
<Table>
<Caption>
                                                                   As of March 31,
                               --------------------------------------------------------------------------------------
                                  2002               2001               2000               1999               1998
                               ----------         ----------         ----------         ----------         ----------
                                                             (In thousands of dollars)
<S>                            <C>                <C>                <C>                <C>                <C>
Total Net Assets Under
Management                     $2,792,999         $3,666,948         $7,028,003         $4,768,271         $5,246,088

</TABLE>

<Table>
<Caption>
                                                                   (As Restated)
                                -----------------------------------------------------------------------------------
<S>                             <C>                <C>                <C>                <C>                <C>
Total Assets                    $60,951            $61,894            $62,795            $67,767            $61,925
Total Liabilities                 4,015              4,638              7,502             15,694             18,475
                                -------            -------            -------            -------            -------
Stockholders' Equity            $56,936            $57,256            $55,293            $52,073            $43,450
                                =======            =======            =======            =======            =======

</TABLE>


<TABLE>
<CAPTION>

                                                                 (As Previously Reported)
                                -------------------------------------------------------------------------------------
<S>                               <C>             <C>                  <C>                  <C>                    <C>
Total Assets                      Na              $64,061              $64,072              $68,169                (1)
Total Liabilities                 Na                5,335                7,777               15,865                (1)
                                                  -------              -------              -------
Stockholders' Equity              Na              $58,726              $56,295              $52,304                (1)
                                                  =======              =======              =======
</TABLE>

(1)      The Company's assets, liabilities and stockholders' equity as of March
         31, 1998 were not restated. The restatement described in Item 7 of this
         Form 10-K did not affect the Company's financial position or results of
         operations as of and for the year ended March 31, 1998.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

Restatement of Previously Reported Results of Operations

         The restatement is related to the accounting for commissions paid by
the Company in connection with certain Class A shares and the amortization of
the deferred selling commissions related to Class B shares. The Company has
restated the consolidated statements of financial condition as March 31, 2001
and the consolidated statements of operations for each of the years ended March
31, 2000 and March 31, 2001, and each of the quarters within the years ended
March 31, 2000 and 2001 and the quarters ended June 30, 2001, September 30, 2001
and December 31, 2001 (see Item 6 and Item 8).

         The Company has determined that the accounting for commissions paid on
certain Class A shares of the Funds was not in accordance with Statement of
Position No. 98-5, "Reporting on the Cost of Start-Up Activities" ("SOP No.
98-5"). In 1998, the staff of the Financial Accounting Standards Board announced
that expenditures paid by an advisor in connection with the distribution of
shares of a fund, when the advisor does not receive both a distribution fee
pursuant to Rule 12b-1 and a contingent deferred sales charge, do not meet the
definition of an asset. As a result, amounts incurred and paid by the Company
related to commissions on Class A shares should have been accounted for as
start-up costs in accordance with SOP No. 98-5. Therefore, such amounts should
be expensed as incurred rather than deferred and amortized. As a result of this
portion of the restatement, the Company recorded additional expenses in the
amount of $370,000, $470,000 and $222,000 for the years ended March 31, 1999,
2000 and 2001, respectively, and decreased expenses in the amount of $622,000
for the year ended March 31, 2002. The reduction in pre-tax income for the years
ended March 31, 1999, 2000, and 2001 resulted from commissions paid on certain
Class A shares during those years exceeding the amount of amortization recorded
for past capitalized Class A commissions. The effect in the year ended March 31,
2002 was the reverse, as commissions paid on certain Class A shares were
significantly less than the amount of amortization recorded for past capitalized
Class A commissions. In addition, the Company recorded the cumulative effect of
the change in accounting principle of $519,000, net of tax benefit of $313,000,
which reduced the Company's net income, to reflect the adoption of SOP No. 98-5
as of April 1, 1999, in the consolidated statement of operations for the year
ended March 31, 2000.

         In addition, the Company's previous amortization policy for deferred
selling commissions for Class B shares was to amortize such amounts on a
straight-line basis without recognition of additional amortization expense when
the Class B shares were redeemed. The Company's amortization policy should have
reflected Class B redemption activity. The Company's restated accounting policy
is to amortize



                                       23
<PAGE>
deferred selling commissions related to Class B shares on a straight-line basis
over six years or until the Class B shares are redeemed, at which time the
unamortized balance related to the redeemed shares is expensed. Therefore, the
Company has restated the consolidated statement of financial condition as of
March 31, 2001 and the consolidated statements of operations for the year ended
March 31, 2001 (and each of the quarters within the year ended March 31, 2001)
and the quarters ended June 30, 2001, September 30, 2001 and December 31, 2001.
This portion of the restatement reduced previously reported pre-tax income by
$466,000 for the year ended March 31, 2001 and $219,000, $97,000 and $112,000
for the quarters ended June 30, 2001, September 30, 2001 and December 31, 2001,
respectively.

         The matters discussed above have resulted in adjustments to the
statements of operations for amounts previously reported for the years ended
March 31, 1999 through 2001 affecting sales literature, advertising and
promotion expense, related to the Class A share commissions paid, and
amortization of deferred selling commission, related to the Class A and B share
commissions. Statement of operations amounts, including net income and earnings
per share, required restatement. Total assets and liabilities, including
deferred selling commissions and deferred tax asset/liability, net, and
stockholders' equity amounts required restatement. The Selected Financial Data
presented in Item 6 and the Consolidated Financial Statements and Supplementary
Data in Item 8 have been restated to reflect the matters discussed above.

         The restatement for the commissions related to the Class A and Class B
shares, as described above, has no impact on the Company's liquidity or cash
flows.

THE FOLLOWING DISCUSSION OF OPERATING RESULTS INCLUDES THE IMPACT OF THE
AFOREMENTIONED RESTATEMENTS.

SUMMARY OF CRITICAL ACCOUNTING POLICIES

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires estimates
and assumptions that affect the reporting of assets, liabilities, revenues and
expenses, and the disclosure of contingent assets and liabilities. Certain of
our accounting policies are critical to understanding our financial statements
because their application places significant demands on management's judgment,
with financial reporting results relying on estimates of matters that are
inherently uncertain.

         We believe that the critical accounting policies described in the
following paragraphs affect the most significant estimates and assumptions used
in the preparation of our consolidated financial statements. For all these
policies, we caution that future events rarely develop exactly as estimated, and
the best estimates routinely require adjustment.

         INTANGIBLE ASSETS

         Intangible assets, consisting principally of the cost of investment
advisory and service contracts, are amortized over a ten-year period. Such
amounts are shown on the consolidated statement of financial condition net of
accumulated amortization. Management periodically assesses the value of its
intangible assets by considering the future economic benefit associated with the
revenue capacity of the contracts.

         REVENUE RECOGNITION

         Revenues for services rendered are recognized on an accrual basis when
the services are performed. Such revenues include management, underwriting,
distribution, fund accounting, administrative services and, through June 30,
2001, transfer agent fees.

         SELLING COMMISSIONS

         In conjunction with the sale of Class B and C shares, MIMI capitalizes
selling commissions it pays to broker-dealers. The Company amortizes deferred
selling commissions related to Class B shares on a straight-line basis over six
years or until the Class B shares are redeemed at which time the unamortized
balance related to the redeemed shares is expensed. MIMI amortizes commissions
paid on Class C shares over one year. In connection with the sale of certain
Class A shares, MIMI pays selling commissions that are recorded as a period cost
and included in sales literature, advertising and promotion expense in the
statement of operations.




                                       24
<PAGE>

         LONG-LIVED ASSETS

         Long-lived assets, principally property and equipment, deferred selling
commissions, and intangible assets, are reviewed and evaluated for impairment
whenever events or changes in circumstances indicate that the carrying value of
the assets may not be fully recoverable. The recoverability of such assets is
measured by comparing the carrying value to the potential future cash flows to
be generated by the respective assets. If these factors indicate that the assets
are considered impaired, the impairment to be recognized is measured as the
excess of the carrying value over the calculated potential future discounted
cash flows.



YEAR ENDED MARCH 31, 2002 COMPARED WITH YEAR ENDED MARCH 31, 2001

         The volatility of the world financial markets continues to adversely
affect the assets and sales of the U.S. Funds and Canadian Funds. Average net
assets under management for the U.S. Funds decreased 49%, to $1,303 million for
the twelve-month period ended March 31, 2002 from $2,542 million for the
twelve-month period ended March 31, 2001. The Canadian Funds' average net assets
decreased 36% to $1,918 million for the twelve-month period ended March 31, 2002
from $3,011 million for the twelve-month period ended March 31, 2001.

         Sales of the U.S. Funds for the twelve-month period ended March 31,
2002 decreased by $481 million compared to the twelve-month period ended March
31, 2001, while redemptions decreased by $940 million for the twelve-month
period ended March 31, 2002 compared to the twelve-month period ended March 31,
2001. Ivy International Fund accounted for 52% and 62% of the sales and
redemptions, respectively, for the twelve-month period ended March 31, 2002 and
38% and 67% of the sales and redemptions, respectively, for the twelve-month
period ended March 31, 2001.

REVENUES

         As described in further detail below, total revenues decreased 47%, or
$24.6 million to $27.5 million for the year ended March 31, 2002 as compared to
$52.1 million for the year ended March 31, 2001.

         Management, 12b-1 service and distribution and administrative service
fees decreased $12.0 million, $3.6 million and $1.2 million, to $12.0 million,
$4.0 million and $1.3 million, respectively, for the year ended March 31, 2002
as compared to $24.0 million, $7.6 million and $2.5 million, respectively, for
the year ended March 31, 2001. These decreases of 50%, 47% and 48%,
respectively, are as a result of the decrease in the U.S. Funds' average net
assets under management.

         Sub-advisory fees from the Canadian Funds decreased 28%, or $2.8
million to $7.2 million for the year ended March 31, 2002 as compared to $10.0
million for the year ended March 31, 2001 as a result of the decrease in the
average net assets of the Canadian Funds.

         Fund accounting and transfer agent fees collectively decreased 63%, or
$2.4 million to $1.4 million for the year ended March 31, 2002 as compared to
$3.8 million for the year ended March 31, 2001 due to a decrease in the number
of U.S. Funds due to reorganizations and dissolutions in the latter portion of
fiscal year 2001 and outsourcing of the Company's internal transfer agency in
June 2001 (See "Narrative Description of Business").

         Underwriting fees have decreased 75%, or $183,000 to $60,000 for the
year ended March 31, 2002 as compared to $243,000 for the year ended March 31,
2001 due to decreases in Class A share sales. Redemption fees have decreased 6%,
or $57,000 to $972,000 for the year ended March 31, 2002 as compared to
$1,029,000 for the year ended March 31, 2001 due to the decrease in redemption
revenue earned on Class C shares exceeding the increase in redemption revenue
earned on Class B shares.



                                       25
<PAGE>

         Interest, dividends and other revenue decreased 55%, or $1.7 million to
$1.4 million for the year ended March 31, 2002 as compared to $3.1 million for
the year ended March 31, 2001 due to a decrease in investment income earned as a
result of declining interest rates and lower dividend distributions from the
investments in the U.S. Funds.

         Net realized loss on marketable securities, which relates to the sale
of and what are deemed to be other than temporary impairments of the Company's
investments in the U.S. Funds, increased 221%, or $539,000 to $783,000 for the
year ended March 31, 2002 as compared to $244,000 for the year ended March 31,
2001 due principally to the Company recording an other than temporary impairment
of the Company's investments in the U.S. Funds during the year ended March 31,
2002.

EXPENSES

         As described in further detail below, total operating expenses of $28.1
million for the year ended March 31, 2002 decreased 42%, or $20.1 million from
$48.2 million (as restated) for the year ended March 31, 2001.

         Sales literature, advertising and promotion expenses of $2.0 million,
which includes commissions paid to broker-dealers on Class A shares, decreased
66%, or $3.8 million for the year ended March 31, 2002 as compared to $5.8
million (as restated) for the year ended March 31, 2001 due to a re-focused
marketing plan and a decline in the sales of Class A shares that are sold at net
asset value and resulted in a reduction of commissions paid by the Company (See
Note 2 to the Consolidated Financial Statements).

         12b-1 Service fees paid to broker/dealers decreased 47%, or $2.7
million to $3.0 million for the year ended March 31, 2002 as compared to $5.7
million for the year ended March 31, 2001 due to the decrease in net assets
under management.

         Employee compensation and benefits decreased 22%, or $3.5 million to
$12.1 million for the year ended March 31, 2002 as compared to $15.6 million for
the year ended March 31, 2001. The decrease is due to an overall decrease in the
number of employees as of March 31, 2002, which was 81 as compared to 119 at
March 31, 2001, a decrease of 32%. From May 2000 to December 2001, the Company
increased its investment advisory personnel by 35% to 27 professionals, in part
as a result of the internalization of the portfolio management of Ivy
International Fund. The increase in investment advisory personnel was offset by
the reduction in headcount in connection with the restructuring initiated in the
fourth quarter of the year ended March 31, 2001 (See "Narrative Description of
Business").

         Sub-advisory fees decreased 86%, or $1.9 million to $285,000 for the
year ended March 31, 2002 as compared to $2.2 million for the year ended March
31, 2001 due to a decline in sub-advised net assets and the internalization of
the portfolio management of Ivy International Fund during the first quarter of
the year ended March 31, 2001.

         Amortization of deferred selling commissions decreased $669,000, or
27%, for the year ended March 31, 2002 compared to the year ended March 31, 2001
due to weaker Class B and C share sales in the current period, which resulted in
a lower Class B and C share asset base at March 31, 2002 as compared to March
31, 2001 (as restated) (See Note 2 to the Consolidated Financial Statements).

         General and administrative expenses decreased 59%, or $4.4 million to
$3.1 million for the year ended March 31, 2002 as compared to $7.5 million for
the year ended March 31, 2001. The decrease was attributable to: (1) costs
incurred last year in connection with the change in control of MFC; (2) the
outsourcing of the transfer agency; (3) the general reductions in connection
with the restructuring initiated in the fourth quarter of the year ended March
31, 2001; and (4) the non-recurrence of costs incurred in the prior year in
connection with various fund reorganizations.

         Occupancy and equipment rental decreased 22%, or $400,000 to $1.4
million for the year ended March 31, 2002 as compared to $1.8 million for the
year ended March 31, 2001. Fiscal year 2001 included



                                       26
<PAGE>

additional lease expense in connection with the early termination of former
office leases. Excluding the additional costs, occupancy and equipment rental
expenses would have been comparable for both years.

         The Company contractually limits total fund expenses for certain U.S.
Funds and bears expenses in excess of such limits. The increase in reimbursement
to the U.S. Funds for expenses of 14%, or $300,000 to $2.4 million for the year
ended March 31, 2002 as compared to $2.1 million for the year ended March 31,
2001 resulted from: (1) an increase in the reimbursement related to decreases in
the average net asset values of the U.S. Funds for which the Company limits
expenses; and (2) a voluntary reimbursement of $400,000 in Ivy International
Fund's ("IIF") operating expenses. Such increases were partially offset by a
decrease in the number of U.S. Funds being reimbursed during the current year in
comparison to the prior year as a result of various fund reorganizations in the
latter half of the year ending March 31, 2001. Excluding the voluntary
reimbursement to IIF, fund expense reimbursement for the year ended March 31,
2002 would have decreased 5% as compared to the year ended March 31, 2001.

YEAR ENDED MARCH 31, 2001 COMPARED WITH YEAR ENDED MARCH 31, 2000

         Average net assets under management, exclusive of net assets of the
Canadian Funds and other sub-advised funds, decreased 25% to $2,542 million for
the twelve-month period ended March 31, 2001 from $3,391 million for the
twelve-month period ended March 31, 2000.

         Sales of the U.S. Funds for the twelve-month period ended March 31,
2001 increased by $13 million compared to the twelve-month period ended March
31, 2000, while redemptions increased by $441 million for the twelve-month
period ended March 31, 2001 compared to the twelve-month period ended March 31,
2000. IIF accounted for 38% and 67% of the sales and redemptions, respectively,
for the twelve-month period ended March 31, 2001 and 42% and 71% of the sales
and redemptions, respectively, for the twelve-month period ended March 31, 2000.

REVENUES

         Total revenues decreased 18% to $52.1 million for the year ended March
31, 2001 from $63.5 million for the year ended March 31, 2000 due principally to
the decrease in the net assets of the U.S. Funds and the fees derived therefrom.
The following is an explanation of increase or decrease in each major category.

         Management, 12b-1 service and distribution, and administrative service
fees decreased $8.5 million, $1.3 million and $0.8 million, to $24.0 million,
$7.6 million and $2.5 million, respectively, for the year ended March 31, 2001
as compared to $32.5 million, $8.9 million and $3.3 million, respectively, for
the year ended March 31, 2001. These decreases of 26%, 15% and 24%,
respectively, are a result of the decrease in the U.S. Funds' average net assets
under management.

         Sub-advisory fees from the Canadian Funds increased 5%, or $0.5
million, to $10.0 million for the year ended March 31, 2001 from $9.5 million
for the year ended March 31, 2000. This increase is attributable to a 35%
increase in the Canadian Funds' average net assets to $3,011 million for the
year ended March 31, 2001 from $2,229 million for the year ended March 31, 2000.
The increase in the Canadian Funds' average net assets is attributable to the
addition of eleven new funds, which were primarily introduced in the third
quarter of the year ended March 31, 2001.

         12b-1 Service and Distribution fees decreased 15%, or $1.3 million, to
$7.6 million for the year ended March 31, 2001 from $8.9 million for the year
ended March 31, 2000 due to the decrease in the U.S. Funds' net assets under
management.

         Fund accounting and transfer agent fees collectively were comparable at
$3.8 million for the years ending March 31, 2001 and 2000.




                                       27
<PAGE>

         Underwriting fees decreased 50%, or $0.2 million, to $0.2 million for
the year ended March 31, 2001 from $0.4 million for the year ended March 31,
2000 due to a decline in Class A share sales during the year ended March 31,
2001.

         Redemption fees increased 150%, or $0.6 million, to $1.0 million for
the year ended March 31, 2001 from $0.4 million for the year ended March 31,
2000 due to an increase in redemptions of Class B and C shares.

         Interest, dividends and other revenues of $3.1 million for the year
ended March 31, 2001 were comparable to fiscal year 2000 amounts.

         Net realized gain (loss) on marketable securities decreased 116% or
$1.8 million for the year ended March 31, 2001 primarily as a result of: (1)
approximately $0.3 million in losses incurred on the dissolution of Mackenzie
Solutions and Ivy International Strategic Bond Fund and (2) the non-recurrence
of approximately $1.5 million in gains realized during the year ended March 31,
2000 as a result of a liquidation in the Company's investment in Ivy European
Opportunities Fund.

EXPENSES

         Total operating expenses of $48.2 million (as restated) for the year
ended March 31, 2001 decreased 9%, or $4.9 million, from $53.1 million (as
restated) for the year ended March 31, 2000.

         Sales literature, advertising and promotion expenses of $5.8 million
(as restated), which includes commission paid to broker-dealers on Class A
shares, increased 2%, or $0.1 million for the year ended March 31, 2001 as
compared to $5.7 million (as restated) for the year ended March 31, 2000.
Commissions paid on Class A shares, that are sold at net asset value, decreased
$250,000, which was offset by an increase of $350,000 for sales literature and
other promotional expenses during the year ended March 31, 2001 (See Note 2 to
the Consolidated Financial Statements).

         12b-1 Service fees paid to broker/dealers decreased 28%, or $2.2
million to $5.7 million for the year ended March 31, 2001 from $7.9 million for
the year ended March 31, 2000 due to the decrease in U.S. Funds' net assets
under management.

         Employee compensation and benefits increased 17%, or $2.3 million, to
$15.6 million for the year ended March 31, 2001 from $13.3 million for the year
ended March 31, 2000. This increase is due to cost of living increases and an
increase in staffing levels for the year ended March 31, 2001 as compared to the
year ended March 31, 2000. The increased staffing levels primarily relate to the
internalization of the portfolio management function of IIF in May 2000. See
"IVY INTERNATIONAL FUND" under "THE PRODUCTS."

         Sub-advisory fees decreased 84%, or $11.4 million, to $2.2 million for
the year ended March 31, 2001 from $13.6 million for the year ended March 31,
2000 due to the internalization of the portfolio management of IIF.

         Amortization of deferred selling commissions increased 281%, or $1.8
million, to $2.5 million (as restated) for the year ended March 31, 2001 from
$0.7 million (as restated) for the year ended March 31, 2000 due to a higher
Class B share asset base and additional amortization of the deferred selling
commission asset related to Class B shares for the year ended March 31, 2001 as
a result of increased redemption revenue. This additional amortization was based
on the Company's policy that the unamortized balance of the deferred selling
commission asset is expensed at the time the Class B shares are redeemed (See
Note 2 to the Consolidated Financial Statements).

         General and administrative expenses increased 15%, or $1.0 million, to
$7.5 million for the year ended March 31, 2001 from $6.5 million for the year
ended March 31, 2000 due primarily to costs incurred in connection with the
change in control of MFC and costs related to reorganizations and dissolutions
of certain funds.




                                       28
<PAGE>

         Restructuring costs of $3.0 million were recorded in the year ended
March 31, 2001. The restructuring plans include out-sourcing the transfer agency
function and downsizing sales and marketing departments and various support
functions. See "RESTRUCTURING" under "NARRATIVE DESCRIPTION OF BUSINESS."

         Occupancy and equipment rental expense increased 80%, or $0.8 million
to $1.8 million for the year ended March 31, 2001 from $1.0 million for the year
ended March 31, 2000 as a result of: (1) expanding the Company's leased office
space to meet the needs of increased staffing levels prior to the March 2001
restructuring and (2) additional lease expense in connection with an early
termination of the present office lease.

         The Company contractually limits total fund expenses for certain U.S.
Funds and bears expenses in excess of such limits. The decrease of $0.5 million,
to $2.1 million for the year ended March 31, 2001 from $2.6 million for the year
ended March 31, 2000 in the reimbursement to the U.S. Funds for expenses is due
to the decrease in the number of U.S. Funds reimbursed resulting from the
reorganization and dissolution of certain funds.

         The Company adopted Statement of Position No. 98-5, "Reporting on the
Costs of Start-Up Activities" and, accordingly, effective April 1, 1999,
recorded the cumulative effect of the change in accounting principle related to
the accounting for commissions paid on Class A shares of $832,000, net of a tax
benefit of $313,000, for the year ended March 31, 2000 (See Note 2 to the
Consolidated Financial Statements).


LIQUIDITY AND CAPITAL RESOURCES

         Liquidity and capital resources are primarily derived from the
operating cash flows received by the Company from managing and providing
investment advisory services to mutual funds offered in the U.S. and from
providing sub-advisory services to the Canadian Funds. The Company believes the
cash and cash equivalents at March 31, 2002, and cash expected to be generated
from operations, will be sufficient to meet working capital requirements and
required capital expenditures for at least the next twelve months.

         The Company's cash and cash equivalents increased to $46.9 million at
March 31, 2002 from $44.8 million at March 31, 2001. This $2.1 million increase
for the year ended March 31, 2002 resulted from (i) cash provided by operating
activities of $3.9 million, including the impact of a decrease in receivables
and an increase in accounts payable, accrued expenses and other liabilities,
offset by the payment of amounts related to restructuring costs and deferred
selling commissions; (ii) cash used in investing activities of approximately
$1.9 million, primarily related to purchases of property and equipment; and
(iii) cash provided by financing activities of approximately $76,000 consisting
of a capital contribution from MFC for costs incurred with respect to the change
in control of MFC offset by the payment of dividends.

         On October 11, 2001, the Company renewed a $10 million line of credit
with First Union National Bank. The line of credit has a term of 364 days and is
available for general working capital and short-term capital expenditure needs.
There are no immediate plans to draw on the line of credit as the Company
maintains sufficient cash balances to meet its financial commitments.

         Capital expenditures for the year ended March 31, 2002 were internally
funded and primarily consisted of furniture and equipment, leasehold
improvements and computer equipment and software enhancements. The Company does
not anticipate incurring significant amounts during the year ending March 31,
2003 in property and equipment, technology and furniture and furnishings.




                                       29
<PAGE>


7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         Reference is made to the information contained under the heading
"BUSINESS - RISK FACTORS AND CAUTIONARY STATEMENTS."


ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The table below indicates selected quarterly financial information for
MIMI on a consolidated basis as restated and as previously reported for the last
eight fiscal quarters.


<TABLE>
<CAPTION>


     Fiscal 2002 for the Quarter Ended                             Jun 30        Sept 30          Dec 31         Mar 31**
                                                                   ------         ------          ------         --------
                                                                               (as restated)
                                                                    (In thousands of dollars, except per share amounts)

<S>                                                                <C>            <C>             <C>            <C>
     Revenues                                                      $9,035         $7,071          $6,261         $5,130

     Expenses                                                       8,335          7,227           6,870          5,645

     Provision (benefit) for income taxes                             270           (34)           (195)           (137)

     Net income (loss)                                                430          (122)           (414)           (378)
     Earnings (loss) per share - basic                               0.02         (0.01)          (0.02)          (0.02)
     Earnings (loss) per share - diluted*                            0.02         (0.01)          (0.02)          (0.02)

</TABLE>

<TABLE>
<CAPTION>

AS PREVIOUSLY REPORTED:

     Fiscal 2002 for the Quarter Ended                             Jun 30        Sept 30          Dec 31
                                                                   ------        -------          ------

     (In thousands of dollars, except per share amounts)

<S>                                                                <C>            <C>             <C>
     Revenues                                                      $9,035         $7,071          $6,261

     Expenses                                                       8,268          7,297           6,915

     Provision (benefit) for income taxes                             296           (60)           (212)

     Net income (loss)                                                471          (166)           (442)
     Earnings (loss) per share - basic                               0.03         (0.01)          (0.02)
     Earnings (loss) per share - diluted*                            0.03         (0.01)          (0.02)

</TABLE>
-----------------

*        Weighted average common stock equivalents ("CSEs") of 495 and 869
         shares for the quarters ended September 30, 2001 and March 31, 2002,
         respectively, have been excluded from the diluted calculations due to
         their anti-dilutive effect in a net loss period. There were no CSEs for
         the quarter ended December 31, 2001.

**       The results of operations for the quarter ended March 31, 2002 includes
         a charge of approximately $672 for other than temporary impairment of
         marketable securities.

<TABLE>
<CAPTION>
AS RESTATED:

     Fiscal 2001 for the Quarter Ended                             Jun 30        Sept 30          Dec 31         Mar 31
                                                                   ------        -------          ------         ------
     (In thousands of dollars, except per share amounts)

<S>                                                               <C>            <C>             <C>            <C>
     Revenues                                                     $15,573        $14,272         $12,089        $10,213

     Expenses***                                                   13,806         11,110          10,495         12,820

     Provision (benefit) for income taxes                             737          1,309             686          (989)

     Net income (loss)                                              1,030          1,853             908        (1,618)
     Earnings (loss) per share - basic                               0.06           0.10            0.05         (0.09)
     Earnings (loss) per share - diluted****                         0.05           0.10            0.05         (0.09)

</TABLE>
                                       30
<PAGE>

<TABLE>
<CAPTION>

AS PREVIOUSLY REPORTED:

     Fiscal 2001 for the Quarter Ended                             Jun 30        Sept 30          Dec 31         Mar 31
                                                                   ------        -------          ------         ------
     (In thousands of dollars, except per share amounts)

<S>                                                               <C>            <C>             <C>            <C>
     Revenues                                                     $15,573        $14,272         $12,089        $10,213

     Expenses***                                                   13,612         10,957          10,318         12,656

     Provision (benefit) for income taxes                             811          1,368             754          (972)

     Net income (loss)                                              1,150          1,947           1,017        (1,471)
     Earnings (loss) per share - basic                               0.06           0.10            0.05         (0.08)
     Earnings (loss) per share - diluted****                         0.06           0.10            0.05         (0.08)

</TABLE>
--------------------

***      Expenses for the quarter ended March 31, 2001 include restructuring
         costs of $3,032. See "RESTRUCTURING" under "NARRATIVE DESCRIPTION OF
         BUSINESS."

****     Weighted average CSEs of 65,551 shares for the quarter ended March 31,
         2001 have been excluded from the diluted calculation due to their
         anti-dilutive effect in a net loss period.

         The financial statements required by this item appear beginning on page
F-1.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

         Not Applicable


                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The Company incorporates by reference the information contained under
the captions "Election of Directors," "Securities Ownership of Certain
Beneficial Owners and Management" and "Section 16(a) Beneficial Ownership
Reporting Compliance" in our Definitive Proxy Statement (the "Proxy Statement")
relative to our annual meeting of shareholders, to be filed within 120 days
after the end of the year covered by this Form 10-K Report pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended. We also
incorporate by reference "Executive Officers of the Registrant" as set forth
under Item 4A of this Report on Form 10-K.


ITEM 11. EXECUTIVE COMPENSATION

         Information called for by this item is set forth under "Summary of
Compensation" in the Proxy Statement and incorporated herein by reference.




                                       31
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         Information called for by this item is set forth under "Securities
Ownership of Certain Beneficial Owners and Management" in the Proxy Statement
and incorporated herein by reference.



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         None



                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) The following documents are filed as part of this report:

1. FINANCIAL STATEMENTS:

     Consolidated Financial Statements and Report of Independent Certified
     Public Accountants included herein. See Index on page F-1.

2. FINANCIAL STATEMENT SCHEDULES:

     All schedules are omitted because they are inapplicable, not required, or
     the information is included elsewhere in the Consolidated Financial
     Statements or the notes thereto.

3. EXHIBITS:

     The following exhibits are filed herewith or incorporated by reference as
indicated below.


<TABLE>
<CAPTION>

Exhibit #         Description                                 Document If Incorporated by Reference
---------         -----------                                 -------------------------------------

<S>      <C>                                                  <C>
3.1.1    Certificate of Incorporation -                       Exhibit 3.1.1 to the Company's
         Mackenzie Investment Management Inc.                 Form 10 filed with the Commission
                                                              on Oct. 13, 1999

3.1.2    Articles of Organization - Ivy Management, Inc.      Exhibit 3.1.2 to the Company's
                                                              Form 10 filed with the Commission
                                                              on Oct. 13, 1999

3.1.3    Articles of Incorporation -                          Exhibit 3.1.3 to the Company's
         Ivy Mackenzie Distributors, Inc.                     Form 10 filed with the Commission
                                                              on Oct. 13, 1999

3.1.4    Articles of Incorporation -                          Exhibit 3.1.4 to the Company's
         Ivy Mackenzie Services Corp.                         Form 10 filed with the Commission
                                                              on Oct. 13, 1999
</TABLE>



                                       32
<PAGE>
<TABLE>
<CAPTION>
<S>      <C>                                                  <C>
3.2.1    By-Laws -                                            Exhibit 3.2.1 to the Company's
         Mackenzie Investment Management Inc.                 Form 10 filed with the Commission
                                                              on Oct. 13, 1999
                  .
3.2.2    By-Laws - Ivy Management, Inc.                       Exhibit 3.2.2 to the Company's
                                                              Form 10 filed with the Commission
                                                              on Oct. 13, 1999

3.2.3    By-Laws - Ivy Mackenzie Distributors, Inc.           Exhibit 3.2.3 to the Company's
                                                              Form 10 filed with the Commission
                                                              on Oct. 13, 1999

3.2.4    By-Laws - Ivy Mackenzie Services Corp.               Exhibit 3.2.4 to the Company's
                                                              Form 10 filed with the Commission
                                                              on Oct. 13, 1999

3.2.5    Amended and Restated By-Laws -                       Exhibit 3.2.5 to the Company's
         Mackenzie Investment Management Inc.                 Form 10-Q filed with the
                                                              Commission on October 27, 2000

4.1      Stock Certificate - Mackenzie Investment             Exhibit 4.1 to the Company's
         Management Inc.                                      Form 10 filed with the Commission
                                                              on Oct. 13, 1999

10.1     Revolving Credit and Term Loan Agreement             Exhibit 10.1 to the Company's
         dated February 11, 1994 between Mackenzie            Form 10 filed with the Commission
         Investment Management Inc. and The First             on Oct. 13, 1999
         National Bank of Boston, as amended

10.2     Mackenzie Program Master Agreement Dated             Exhibit 10.2 to the Company's
         as of March 16, 1999 among Mackenzie                 Form 10 filed with the Commission
         Investment Management Inc, as Parent, Ivy            on Oct. 13, 1999
         Management, Inc. and Mackenzie Investment
         Management Inc. as Advisor, Ivy Mackenzie
         Distributors, Inc. as Distributor, Ivy Mackenzie
         Services Corp., as Program Service Agent,
         Putnam Lovell Finance L.P. as Purchaser, Putnam,
         Lovell, De Guardiola & Thornton Inc. as Program
         Administrator and Bankers Trust Company, not in
         its individual capacity but solely as Collection
         Agent, except as otherwise expressly provided.

10.3     Lease Agreement between Via Mizner Associates        Exhibit 10.3 to the Company's
         (Landlord) and Mackenzie Investment Management       Form 10 filed with the Commission
         Inc. (Tenant)                                        on Oct. 13, 1999

10.4     Sublease Agreement between Buenos Aires              Exhibit 10.4 to the Company's
         Embotelladora S.A. as Lessor and Mackenzie           Form 10 filed with the Commission
        Investment Management Inc. as Lessee.                 on Oct. 13, 1999

10.5     First Amendment to Sublease Between Buenos           Exhibit 10.5 to the Company's
         Aires Embotelladora S.A. (Lessor) and Mackenzie      Form 10 filed with the Commission
         Investment Management Inc., (Lessee)                 on Oct. 13, 1999

10.6     Lease Agreement Between Via Mizner Associates        Exhibit 10.6 to the Company's
         and Ivy Management, Inc.                             Form 10 filed with the Commission
                                                              on Oct. 13, 1999

</Table>

                                       33
<PAGE>
<TABLE>
<CAPTION>
<S>      <C>                                                  <C>
10.7     First Amendment to Lease Agreement Between           Exhibit 10.7 to the Company's
         Via Mizner Associates and Ivy Management, Inc.       Form 10 filed with the Commission
                                                              on Oct. 13, 1999

10.8     Mackenzie Investment Management, Inc.                Exhibit 10.8 to the Company's
         1994 Stock Option Plan                               Form 10 filed with the Commission
                                                              on Oct. 13, 1999

10.9     Mackenzie Investment Management Inc.                 Exhibit 10.9 to the Company's
         Profit Sharing Plan, as amended                      Form 10 filed with the Commission
                                                              on Oct. 13, 1999

10.10    Master Administrative Services Agreement -           Exhibit 10.10 to the Company's
         Ivy Fund                                             Form 10 filed with the Commission
                                                              on Oct. 13, 1999

10.11    Master Business Management and Investment            Exhibit 10.11 to the Company's
         Advisory Agreement - Ivy Fund                        Form 10 filed with the Commission
                                                              on Oct. 13, 1999

10.12    Master Fund Accounting Services Agreement -          Exhibit 10.12 to the Company's
         Ivy Fund                                             Form 10 filed with the Commission
                                                              on Oct. 13, 1999

10.13    Master Business Management and Investment            Exhibit 10.13 to the Company's
         Advisory Agreement - Mackenzie Solutions             Form 10 filed with the Commission
                                                              on Oct. 13, 1999

10.14    Master Fund Accounting Services Agreement -          Exhibit 10.14 to the Company's
         Mackenzie Solutions                                  Form 10 filed with the Commission
                                                              on Oct. 13, 1999

10.15    Subadvisory Agreement dated July 1, 1999,            Exhibit 10.15 to the Company's
         between Ivy Management, Inc. and Garmaise            Form 10 filed with the Commission
         Investment Technologies (US) Inc.                    on Oct. 13, 1999

10.16    Credit Agreement dated October 13, 1999              Exhibit 10.16 to the Company's
         between Mackenzie Investment Managementand           Form 10-K filed with the its
         Subsidiaries, and First Union National               Commission on June 29, 2000.
         Bank

10.17    Lease Agreement dated March 20, 2000 between         Exhibit 10.17 to the Company's
         Boca II Associates, Ltd. (Landlord) and Mackenzie    Form 10-K filed with the
         Investment Management Inc. (Tenant)                  Commission on June 29, 2000.

10.18    Master Mackenzie Dealer Agreement for the Sale       Exhibit 10.18 to the Company's
         of Shares of The Mackenzie Group of Funds            Form 10-K filed with the
                                                              Commission on June 29, 2000.

10.19    Ivy Fund Amended and Restated Distribution           Exhibit 10.19 to the Company's
         Agreement dated October 23, 1993                     Form 10-K filed with the
                                                              Commission on June 29, 2000.

10.20    Subadvisory Contract between Ivy Fund, Ivy           Exhibit 10.20 to the Company's
         Management, Inc. and Boston Overseas                 Form 10-K filed with the
         Investors, Inc. dated December 31, 1991              Commission on June 29, 2000.

</TABLE>


                                       34
<PAGE>


<TABLE>
<CAPTION>
<S>      <C>                                                  <C>
10.21    Assignment Agreement between Northern Cross          Exhibit 10.21 to the Company's
         Investments Limited, Boston Overseas Investors,      Form 10-K filed with the Inc., Ivy
         Fund and Ivy Management, Inc. dated                  Commission on June 29, 2000.
         April 1, 1993

10.22    Investment Advisory Agreement between Ivy Fund       Exhibit 10.22 to the Company's
         and Mackenzie Financial Corporation                  Form 10-K filed with the
                                                              Commission on June 29, 2000.

10.23    Transfer Agency and Shareholder Services             Exhibit 10.23 to the Company's
         Agreement between Ivy Fund and Ivy Management,       Form 10-K filed with the
         Inc. dated January 1, 1992                           Commission on June 29, 2000.

10.24    Assignment Agreement between Mackenzie Ivy           Exhibit 10.24 to the Company's
         Investor Services Corp., Ivy Fund and Ivy            Form 10-K filed with the
         Management, Inc. dated October 1, 1993               Commission on June 29, 2000.

10.25    Ivy Fund Addendum to Transfer Agency and             Exhibit 10.25 to the Company's
         Shareholder Services Agreement dated                 Form 10-K filed with the
         October 1, 1993                                      Commission on June 29, 2000.

10.26    Subadvisory Agreement between Ivy Management,        Exhibit 10.26 to the Company's
         Inc. and Henderson Investment Management             Form 10-K filed with the
         Limited dated February 1, 1999                       Commission on June 29, 2000.

10.27    Amendment to Schedule A to Subadvisory               Exhibit 10.27 to the Company's
         Agreement between Ivy Management, Inc. and           Form 10-K filed with the
         Henderson Investment Management Limited              Commission on June 29, 2000
         dated April 30, 1999.

10.28    Subadvisory Agreement between Ivy Management,        Exhibit 10.28 to the Company's
         Inc. and Peter Cundill and Associates, Inc. dated    Form 10-K filed with the
         March 1, 2000                                        Commission on June 29, 2000.

10.29    Change in Control Agreement -                        Exhibit 10.29 to the Company's
         Paul Baran                                           Form 10-Q filed with the
                                                              Commission on January 23, 2001.

10.29.1  Amendment to Change in Control Agreement -           Exhibit 10.29.1 filed herewith
         Paul Baran

10.30    Change in Control Agreement -                        Exhibit 10.30 to the Company's
         Thomas Bivin                                         Form 10-Q filed with the
                                                              Commission on January 23, 2001.

10.30.1  Amendment to Change in Control Agreement -           Exhibit 10.30.1 filed herewith
         Thomas Bivin

10.31    Change in Control Agreement -                        Exhibit 10.31 to the Company's
         Tom Bracco                                           Form 10-Q filed with the
                                                              Commission on January 23, 2001.

10.32    Change in Control Agreement -                        Exhibit 10.32 to the Company's
         James Broadfoot                                      Form 10-Q filed with the
                                                              Commission on January 23, 2001.

</TABLE>

                                       35
<PAGE>
<TABLE>
<CAPTION>
<S>      <C>                                                  <C>
10.32.1  Amendment to Change in Control Agreement -           Exhibit 10.32.1 filed herewith
         James Broadfoot

10.33    Change in Control Agreement -                        Exhibit 10.33 to the Company's
         Keith J. Carlson                                     Form 10-Q filed with the
                                                              Commission on January 23, 2001.

10.34    Change in Control Agreement -                        Exhibit 10.34 to the Company's
         William Ferris                                       Form 10-Q filed with the
                                                              Commission on January 23, 2001.

10.35    Change in Control Agreement -                        Exhibit 10.35 to the Company's
         Robert Perry                                         Form 10-Q filed with the
                                                              Commission on January 23, 2001.

10.35.1  Amendment to Change in Control Agreement -           Exhibit 10.35.1 filed herewith
         Robert Perry


10.36    Change in Control Agreement -                        Exhibit 10.36 to the Company's
         Sheridan Reilly                                      Form 10-Q filed with the
                                                              Commission on January 23, 2001.

10.37    Change in Control Agreement -                        Exhibit 10.37 to the Company's
         Beverly Yanowitch                                    Form 10-Q filed with the
                                                              Commission on January 23, 2001.

10.37.1  Amendment to Change in Control Agreement -           Exhibit 10.37.1 filed herewith
         Beverly Yanowitch

10.38    Employee Retention Plan                              Exhibit 10.38 to the Company's
                                                              Form 10-Q filed with the
                                                              Commission on January 23, 2001.

10.38.1  Employee Retention Plan                              Exhibit 10.38.1 filed herewith

10.38.2  Retention Plan for Subsidiary Officers,              Exhibit 10.38.2 filed herewith
         Regional VP's and Investment Professionals

10.39    Change in Control Agreement -                        Exhibit 10.39 to the Company's
         Stephen Barrett                                      Form 10-Q filed with the
                                                              Commission on November 1, 2001.

10.40    Lease Agreement Between Boca II Associates           Exhibit 10.40 filed herewith
         (Landlord) and Mackenzie Investment Management
         Inc. (Tenant)

10.41    Sublease Agreement Between Mackenzie                 Exhibit 10.41 filed herewith
         Investment Management Inc. (Lessor) and BB&T
         Capital Markets, Inc., a division of Scott &
         Stringfellow, Inc. (Lessee)

</TABLE>


                                       36
<PAGE>
<TABLE>
<CAPTION>
<S>      <C>                                                  <C>
10.42    First Amendment to Lease Between Newport             Exhibit 10.42 filed herewith
         Center BP LLC a Florida Limited Liability Company
         as successor in interest to Glenborough Properties,
         L.P., a California limited partnership (Landlord)
         and Mackenzie Investment Management Inc. (Tenant)

10.43    Master Business Management and Investment            Exhibit 10.43 filed herewith
         Advisory Agreement - Ivy Fund (Fund) and Ivy
         Management, Inc. (Manager) dated May 29, 2001.

10.44    Master Business Management and Investment            Exhibit 10.44 filed herewith
         Advisory Agreement Supplement - Ivy Fund (Fund)
         and Ivy Management, Inc. (Manager) dated
         May 29, 2001.

10.45    Master Business Management and Investment            Exhibit 10.45 filed herewith
         Advisory Agreement Supplement - Ivy Fund (Trust)
         on behalf of Ivy Global Natural Resources Fund and
         Ivy Management, Inc. (Manager) dated May 29, 2001.

10.46    Investment Advisory Agreement - Ivy Fund (Trust)     Exhibit 10.46 filed herewith
         Mackenzie Financial Corporation (Adviser) dated
         May 29, 2001.

10.47    Subadvisory Agreement Between Ivy Management,        Exhibit 10.47 filed herewith
         Inc. (Manager) and Henderson Investment
         Management Limited (Subadviser) dated
         May 29, 2001.

10.48    Subadvisory Agreement Between Ivy Management,        Exhibit 10.48 filed herewith
         Inc. (Manager) and Peter Cundill and Associates,
         Inc. (Subadviser) dated May 29, 2001.

10.49    Ivy Fund Amended and Restated Distribution           Exhibit 10.49 filed herewith
         Agreement dated April 18, 2001

10.50    Transfer Agency and Services Agreement Between       Exhibit 10.50 filed herewith
         Ivy Fund and PFPC Inc. dated June 25, 2001

21.1     Subsidiaries                                         Exhibit 21.1 to the Company's
                                                              Form 10 filed with the Commission
                                                              on Oct. 13, 1999

24.1     Powers of Attorney                                   Exhibit 24.1 to the Company's
                                                              Form 10 filed with the Commission
                                                              on Oct. 13, 1999

27.1     Financial Data Schedule

</TABLE>

(b) REPORTS ON FORM 8-K:

*        On December 10, 2001, the Company filed a Form 8-K under Item 5
         announcing the declaration of a dividend of U.S. $0.01 per share to
         shareholders of record on December 28, 2001, with a payable date of
         January 7, 2002.



                                       37
<PAGE>

*        On November 20, 2001, the Company filed a Form 8-K under Item 5
         announcing the change of lead manager of the Ivy Funds International
         Equities Advisory team.

*        On September 13, 2001, the Company filed a Form 8-K under Item 5
         announcing the rescheduling of the Company's Annual and Special Meeting
         of Shareholders for Wednesday, September 19, 2001.

*        On September 11, 2001, the Company filed a Form 8-K under Item 5
         announcing the cancellation of the Company's Annual and Special Meeting
         of Shareholders originally scheduled for Thursday, September 13, 2001.

*        On August 13, 2001, the Company filed a Form 8-K under Item 5
         announcing a recent change to the Board of Directors of the Company.

*        On June 18, 2001, the Company filed a Form 8-K under Item 5 announcing
         its financial results for the fourth quarter and year ended March 31,
         2001.

*        On June 18, 2001, the Company filed a Form 8-K under Item 5 announcing
         the declaration of a dividend of U.S. $0.01 per share to shareholders
         of record on June 27, 2001 with a payable date of July 6, 2001.




                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


MACKENZIE INVESTMENT MANAGEMENT INC.

By: /s/ Keith J. Carlson
    --------------------------------
    Keith J. Carlson
    President, Chief Executive Officer and Director
    Date: July 9, 2002

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

Name                                      Capacity                                                  Date
----                                      --------                                                  ----
<S>                                       <C>                                                       <C>
/s/ Keith J. Carlson                      President, Chief Executive Officer and                    July 9, 2002
----------------------------------        Director
Keith J. Carlson


/s/ Beverly J. Yanowitch                  Vice President and Chief Financial Officer                July 9, 2002
-----------------------------------
Beverly J. Yanowitch


/s/ Neil Lovatt                           Chairman and Director                                     July 9, 2002
-----------------------------------
Neil Lovatt

</TABLE>


                                       38
<PAGE>
<TABLE>
<CAPTION>
<S>                                       <C>                                                       <C>
/s/ James W. Broadfoot III                Senior Vice President and Director.                      July 9, 2002
-----------------------------------
James W. Broadfoot III


/s/ Alan J. Dilworth                      Director                                                July 9, 2002
-----------------------------------
Alan J. Dilworth


/s/ Allan S. Mostoff                      Director                                                July 9, 2002
-----------------------------------
Allan S. Mostoff, Esq.



/s/ James L. Hunter                       Director                                                July 9, 2002
-----------------------------------
James L. Hunter


/s/ Alasdair J. McKichan                  Director                                                July 9, 2002
-----------------------------------
Alasdair J. McKichan


/s/ Michael R. Peers                      Director                                                July 9, 2002
-----------------------------------
Michael R. Peers


/s/ Paul P. Baran                         Vice President                                          July 9, 2002
-----------------------------------
Paul P. Baran


/s/ Thomas H. Bivin, Jr.                  Vice President                                          July 9, 2002
-----------------------------------
Thomas H. Bivin, Jr.

</TABLE>





                                       39
<PAGE>



MACKENZIE INVESTMENT
MANAGEMENT INC.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2002 AND 2001 AND
FOR THE YEARS ENDED MARCH 31, 2002, 2001 AND 2000

<PAGE>


TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                         PAGES
<S>                                                                                                    <C>
Management's Report to Stockholders                                                                       F - 2

Report of Independent Certified Public Accountants                                                        F - 3

Financial Statements:

    Consolidated Statements of Financial Condition as of
    March 31, 2002 and 2001                                                                               F - 4

    Consolidated Statements of Operations for the years ended
    March 31, 2002, 2001 and 2000                                                                         F - 5

    Consolidated Statements of Changes in Stockholders' Equity
    for the years ended March 31, 2002, 2001 and 2000                                                     F - 6

    Consolidated Statements of Cash Flows for the years ended
    March 31, 2002, 2001 and 2000                                                                         F - 7

    Notes to Consolidated Financial Statements                                                         F-8 - F-24
</TABLE>



                                      F-1

<PAGE>

                       MANAGEMENT'S REPORT TO STOCKHOLDERS

         The accompanying consolidated financial statements and all information
in the Form 10-K have been prepared by management and approved by the Board of
Directors of Mackenzie Investment Management Inc. (the "Company"). The
consolidated financial statements were prepared in accordance with accounting
principles generally accepted in the United States of America and, where
appropriate, reflect management's best estimates and judgments. The Company has
restated their consolidated financial statements as of March 31, 1999 through
March 31, 2001, and for each of the years then ended and each of the quarters
within the years ended March 31, 2000 and 2001 and the quarters ended June 30,
2001, September 30, 2001 and December 31, 2001 (see Note 2 to the Notes to the
Consolidated Financial Statements). The Company has reviewed its consolidated
financial statements for the periods presented for compliance with accounting
principles generally accepted in Canada and has determined that there are no
material differences between the amounts reported in these financial statements
and the amounts which would be reported in accordance with accounting principles
generally accepted in Canada.

         Management is responsible for the accuracy, integrity and objectivity
of the consolidated financial statements within reasonable limits of materiality
and for the consistency of financial data included in the text of the Form 10-K
with that contained in the consolidated financial statements.

         Management is responsible for the maintenance of a system of internal
controls designed to provide reasonable assurance that the Company's assets are
safeguarded; that only valid and authorized transactions are executed; and that
accurate, timely, and comprehensive financial information is prepared.

         The Company's Audit, Finance and Risk Committee is appointed by the
Board of Directors annually and is comprised of three non-management directors.
The Audit, Finance and Risk Committee meets with management as well as with the
independent certified public accountants to satisfy itself that management is
properly discharging its financial reporting responsibilities and to review the
consolidated financial statements and the report of independent certified public
accountants. The Audit, Finance and Risk Committee reports its findings to the
Board of Directors for consideration in approving the consolidated financial
statements for presentation to the stockholders. The independent certified
public accountants have direct access to the Audit, Finance and Risk Committee
of the Board of Directors.

         The consolidated financial statements have been independently audited
by PricewaterhouseCoopers LLP on behalf of the stockholders, in accordance with
auditing standards generally accepted in the United States of America. Their
report outlines the nature of their audit and expresses their opinion on the
consolidated financial statements of the Company.

/s/ Keith J. Carlson                                  /s/ Beverly J. Yanowitch
-------------------------------------                 -------------------------
Keith J. Carlson                                      Beverly J. Yanowitch
President and Chief Executive Officer                 Vice President and Chief
July 8, 2002                                          Financial Officer


                                      F-2
<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Board of Directors and Stockholders of
  Mackenzie Investment Management Inc.

In our opinion, the accompanying consolidated statements of financial condition
and the related consolidated statements of operations, of changes in
stockholders' equity and of cash flows present fairly, in all material respects,
the financial position of Mackenzie Investment Management Inc. and its
subsidiaries at March 31, 2002 and 2001, and the results of their operations and
their cash flows for each of the three years in the period ended March 31, 2002
in conformity with accounting principles generally accepted in the United States
of America. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the accompanying consolidated financial statements,
the Company has restated its financial statements as of March 31, 1999 and for
each of the two years in the period ended March 31, 2001.


PricewaterhouseCoopers LLP

Fort Lauderdale, Florida
July 8, 2002


                                      F-3
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
                                                                                     MARCH 31,
                                                                        ----------------------------------
                              ASSETS                                         2002                  2001
                                                                                              (AS RESTATED)
<S>                                                                     <C>                  <C>
Cash and cash equivalents                                               $  46,927,723        $  44,797,238
Marketable securities                                                       2,271,247            2,460,918
Receivables:
   Funds for fees and expense advances                                      1,645,813            2,422,457
   Other                                                                      727,831            1,261,619
Property and equipment, net                                                 2,493,398              748,867
Intangible assets, net                                                      3,034,960            4,276,788
Deferred selling commissions                                                3,302,695            4,630,312
Other assets                                                                  547,039            1,295,709
                                                                        -------------        -------------
        Total assets                                                    $  60,950,706        $  61,893,908
                                                                        =============        =============

             LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
   Payable to Funds for purchases of Funds' shares and
     expense reimbursements                                             $     302,272        $     148,373
   Accounts payable                                                           234,702              658,260
   Accrued expenses and other liabilities                                   3,143,044            2,061,787
   Restructuring costs                                                        224,835            1,769,355
   Deferred taxes                                                             110,195                   --
                                                                        -------------        -------------
        Total liabilities                                                   4,015,048            4,637,775
                                                                        -------------        -------------
Commitments  and contingencies

Stockholders' equity:
   Capital stock, $.01 par value, 100,000,000 shares authorized,
     18,655,550 and 18,741,800 shares issued and outstanding                  186,556              187,418
   Additional paid-in capital                                              38,609,953           39,024,802
   Retained earnings                                                       18,095,975           18,954,818
   Unearned stock compensation                                                     --             (493,757)
   Accumulated other comprehensive income (loss), net of tax                   43,174             (417,148)
                                                                        -------------        -------------
        Total stockholders' equity                                         56,935,658           57,256,133
                                                                        -------------        -------------
        Total liabilities and stockholders' equity                      $  60,950,706        $  61,893,908
                                                                        =============        =============
</TABLE>


   The accompanying notes are an integral part of these financial statements.

<TABLE>
<S>                                           <C>                           <C>
                                              /s/ Neil Lovatt               /s/ Alan J. Dilworth
                                              ---------------               --------------------
Signed on behalf of the Board of Directors    Neil Lovatt                   Alan J. Dilworth
                                              Chairman                      Director, Chairman of Audit
                                                                            Finance and Risk Committee
</TABLE>



                                      F-4
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                         FOR THE YEARS ENDED MARCH 31,
                                                             ------------------------------------------------------
                                                                 2002                 2001                  2000
 Revenues:                                                                        (AS RESTATED)        (AS RESTATED)
<S>                                                          <C>                  <C>                  <C>
    Management fees                                          $ 12,025,673         $ 24,022,072         $ 32,546,397
    Sub-advisory fees from Canadian Funds                       7,163,442           10,012,381            9,468,542
    12b-1 Service and Distribution fees                         3,985,225            7,632,165            8,923,631
    Transfer agent fees                                           627,384            3,007,280            2,993,736
    Administrative service fees                                 1,340,148            2,502,927            3,251,215
    Fund accounting fees                                          723,071              819,402              819,391
    Underwriting fees                                              59,757              243,245              394,970
    Redemption fees                                               972,298            1,028,859              387,025
    Interest, dividends and other                               1,383,606            3,122,788            3,206,366
    Net realized (loss) gain on marketable securities            (783,078)            (243,745)           1,514,857
                                                             ------------         ------------         ------------
                                                               27,497,526           52,147,374           63,506,130
                                                             ------------         ------------         ------------
 Expenses:
    Sales literature, advertising and promotion                 2,020,755            5,798,128            5,682,136
    12b-1 Service fees                                          2,980,207            5,680,189            7,897,998
    Employee compensation and benefits                         12,149,342           15,572,667           13,327,869
    Sub-advisory fees                                             285,203            2,231,502           13,603,911
    Amortization of intangible assets                           1,241,828            1,233,278            1,123,262
    Amortization of deferred selling commissions                1,826,701            2,495,863              653,745
    Depreciation                                                  632,037              756,019              696,535
    General and administrative                                  3,099,660            7,518,988            6,451,071
    Restructuring costs                                                --            3,031,702                   --
    Occupancy and equipment rental                              1,420,546            1,790,652            1,044,229
    Reimbursement to Funds for expenses                         2,420,642            2,121,718            2,584,021
                                                             ------------         ------------         ------------
                                                               28,076,921           48,230,706           53,064,777
                                                             ------------         ------------         ------------
    (Loss) Income before income taxes and
       cumulative effect of accounting change                    (579,395)           3,916,668           10,441,353
          (Benefit) Provision for income taxes                    (94,526)           1,742,755            4,244,184
                                                             ------------         ------------         ------------
    Net (loss) income before cumulative effect of
       accounting change                                         (484,869)           2,173,913            6,197,169
    Cumulative effect of accounting change,
       net of tax benefit of $313,175                                  --                   --             (519,074)
                                                             ------------         ------------         ------------
    Net (loss) income                                        $   (484,869)        $  2,173,913         $  5,678,095
                                                             ============         ============         ============
    Basic (loss) earnings per share                          $      (0.03)        $       0.12         $       0.30
                                                             ============         ============         ============
          Weighted average number of common
              shares outstanding used in basic
              calculation                                      18,663,985           18,631,729           18,781,410
                                                             ============         ============         ============
    Diluted (loss) earnings per share                        $      (0.03)        $       0.12         $       0.30
                                                             ============         ============         ============
          Weighted average number of common and
              common equivalent shares outstanding
              used in diluted calculation                      18,663,985           18,734,520           18,817,070
                                                             ============         ============         ============
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       F-5

<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 2002, 2001 AND 2000


<TABLE>
<CAPTION>
                                                                                                 ADDITIONAL             RETAINED
                                                                 COMMON STOCK                     PAID-IN               EARNINGS
                                                           SHARES             AMOUNT              CAPITAL             (AS RESTATED)
                                                         ----------         ----------         -------------         -------------
<S>                                                      <C>                <C>                <C>                   <C>
Balance, March 31, 1999 as previously reported           19,210,200         $  192,102         $  40,403,488         $  11,708,248
Adjustment (Note 2)                                              --                 --                    --              (230,902)
                                                         ----------         ----------         -------------         -------------
Balance, March 31, 1999, as restated                     19,210,200            192,102            40,403,488            11,477,346
Issuance of common stock under stock option plan              3,000                 30                 3,720                    --
Purchase and retirement of common stock                    (621,400)            (6,214)           (2,454,676)                   --
Net income for the year                                          --                 --                    --             5,678,095
                                                         ----------         ----------         -------------         -------------
Balance, March 31, 2000                                  18,591,800            185,918            37,952,532            17,155,441
Issuance of common stock under
  stock option plan                                          35,000                350                58,650                    --
Issuance of common stock under stock
  compensation agreement                                    115,000              1,150               639,400                    --
Amortization of unearned stock compensation                      --                 --                    --                    --
Capital contribution (Note 7)                                    --                 --               374,220                    --
Other comprehensive loss, net of tax                             --                 --                    --                    --
Cash dividends on common stock, $0.01 per share                  --                 --                    --              (374,536)
Net income for the year                                          --                 --                    --             2,173,913
                                                         ----------         ----------         -------------         -------------
Balance, March 31, 2001                                  18,741,800            187,418            39,024,802            18,954,818
Amortization of unearned stock compensation                      --                 --                    --                    --
Capital contribution (Note 7)                                    --                 --                75,627                    --
Other comprehensive income, net of tax                           --                 --                    --                    --
Impairment charge on available for
  sale securities, net of tax
Retirement of common stock under stock
  compensation agreement                                    (86,250)              (862)             (490,476)                   --
Cash dividends on common stock, $0.01 per share                  --                 --                    --              (373,974)
Net loss for the year                                            --                 --                    --              (484,869)
                                                         ----------         ----------         -------------         -------------
Balance, March 31, 2002                                  18,655,550         $  186,556         $  38,609,953         $  18,095,975
                                                         ==========         ==========         =============         =============

<CAPTION>
                                                                               ACCUMULATED
                                                                                  OTHER                 TOTAL
                                                          UNEARNED            COMPREHENSIVE         STOCKHOLDERS'
                                                            STOCK             INCOME(LOSS),             EQUITY
                                                        COMPENSATION            NET OF TAX          (AS RESTATED)
                                                        -------------         -------------         -------------
<S>                                                     <C>                   <C>                   <C>
Balance, March 31, 1999 as previously reported          $          --         $          --            52,303,838
Adjustment (Note 2)                                                --                    --              (230,902)
                                                        -------------         -------------         -------------
Balance, March 31, 1999, as restated                               --                    --            52,072,936
Issuance of common stock under stock option plan                   --                    --                 3,750
Purchase and retirement of common stock                            --                    --            (2,460,890)
Net income for the year                                            --                    --             5,678,095
                                                        -------------         -------------         -------------
Balance, March 31, 2000                                            --                    --            55,293,891
Issuance of common stock under
  stock option plan                                                --                    --                59,000
Issuance of common stock under stock
  compensation agreement                                     (640,550)                   --                    --
Amortization of unearned stock compensation                   146,793                    --               146,793
Capital contribution (Note 7)                                      --                    --               374,220
Other comprehensive loss, net of tax                               --              (417,148)             (417,148)
Cash dividends on common stock, $0.01 per share                    --                    --              (374,536)
Net income for the year                                            --                    --             2,173,913
                                                        -------------         -------------         -------------
Balance, March 31, 2001                                      (493,757)             (417,148)           57,256,133
Amortization of unearned stock compensation                    13,345                    --                13,345
Capital contribution (Note 7)                                      --                    --                75,627
Other comprehensive income, net of tax                             --                40,922                40,922
Impairment charge on available for
  sale securities, net of tax
Retirement of common stock under stock                                              419,400               419,400
  compensation agreement                                      480,412                    --               (10,926)
Cash dividends on common stock, $0.01 per share                    --                    --              (373,974)
Net loss for the year                                              --                    --              (484,869)
                                                        -------------         -------------         -------------
Balance, March 31, 2002                                 $          --         $      43,174         $  56,935,658
                                                        =============         =============         =============
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       F-6


<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 2002, 2001 AND 2000

<TABLE>
<CAPTION>
                                                                                      FOR THE YEARS ENDED MARCH 31,
                                                                           --------------------------------------------------
                                                                               2002                2001              2000
                                                                                              (AS RESTATED)      (AS RESTATED)
<S>                                                                        <C>                <C>                <C>
Cash flows from operating activities:
    Net (loss) income                                                      $   (484,869)      $  2,173,913       $  5,678,095
    Adjustments to reconcile net (loss) income to net cash
        provided by (used in) operating activities:
        Depreciation                                                            632,037            756,019            696,535
        Amortization of intangible assets                                     1,241,828          1,233,278          1,123,262
        Amortization of deferred selling commissions                          1,826,701          2,495,863            653,745
        Amortization of unearned compensation                                    13,345            146,793                 --
        Deferred tax (benefit) expense                                          (32,221)          (883,727)         1,157,958
        Payment of deferred selling commissions                                (499,084)        (2,970,206)        (4,251,000)
        Cumulative effect of accounting change                                       --                 --            832,249
        Other                                                                   849,189            167,164         (1,850,898)
        Change in assets and liabilities:
            Receivables                                                         936,212          3,309,736           (392,616)
            Other assets                                                        166,775           (753,231)           123,401
            Payable to Funds for purchases of Funds' shares and
              expense reimbursements                                            153,899           (340,547)           330,555
            Accounts payable, accrued expenses and other liabilities            657,700         (2,601,667)        (1,140,447)
            Restructuring costs                                              (1,544,520)         1,769,355                 --
            Income taxes payable                                                     --                 --         (8,966,267)
                                                                           ------------       ------------       ------------
Net cash provided by (used in) operating activities                           3,916,992          4,502,743         (6,005,428)
                                                                           ------------       ------------       ------------
Cash flows from investing activities:
    Acquisition of intangible assets                                                 --            (79,874)          (910,169)
    Purchases of property and equipment                                      (2,007,022)          (420,674)          (474,049)
    Proceeds from the sale of marketable securities                             175,071          1,602,442          2,515,446
    Purchases of marketable securities                                          (30,429)        (1,587,164)        (2,605,582)
                                                                           ------------       ------------       ------------
Net cash used in investing activities                                        (1,862,380)          (485,270)        (1,474,354)
                                                                           ------------       ------------       ------------
Cash flows from financing activities:
    Purchase and retirement of common stock                                          --                 --         (2,460,890)
    Proceeds from the exercise of stock options                                      --             59,000              3,750
    Capital contribution                                                        449,847                 --                 --
    Dividends paid                                                             (373,974)          (374,536)                --
                                                                           ------------       ------------       ------------
Net cash provided by (used in) financing activities                              75,873           (315,536)        (2,457,140)
                                                                           ------------       ------------       ------------
Net increase (decrease) in cash and cash equivalents                          2,130,485          3,701,937         (9,936,922)

Cash and cash equivalents, beginning of year                                 44,797,238         41,095,301         51,032,223
                                                                           ------------       ------------       ------------
Cash and cash equivalents, end of year                                     $ 46,927,723       $ 44,797,238       $ 41,095,301
                                                                           ============       ============       ============
Supplemental disclosures:
    Income taxes paid                                                      $     45,000       $  3,592,000       $ 11,740,000
                                                                           ============       ============       ============
</TABLE>


   The accompanying notes are an integral part of these financial statements.



                                       F-7

<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Mackenzie Investment Management Inc. ("MIMI") is a majority-owned
         subsidiary of Mackenzie Financial Corporation of Toronto, Ontario
         ("MFC"), which is a wholly owned subsidiary of Investors Group Inc.
         MIMI is an investment adviser and has three wholly-owned subsidiaries
         as follows: Ivy Management, Inc. ("IMI"), an investment adviser; Ivy
         Mackenzie Distributors, Inc. ("IMDI"), a broker/dealer; and Ivy
         Mackenzie Services Corp. ("IMSC"), formerly a transfer agent. MIMI and
         IMI (the "Advisers") are registered with the Securities and Exchange
         Commission ("SEC") as investment advisers. IMDI is registered with the
         SEC as a broker-dealer and is a member of the National Association of
         Securities Dealers, Inc

         The Advisers are engaged in the management of Ivy Fund (the "Funds"), a
         registered investment company consisting of sixteen funds at March 31,
         2002. The Advisers have exclusive management agreements (the
         "Management Agreements") entitling them to manage the Funds. The
         Advisers also provide sub-advisory services to twenty-one Universal
         mutual funds at March 31, 2002 sold only in Canada and managed by MFC
         (the "Canadian Funds").

         IMDI, as the broker-dealer, has underwriting agreements with the Funds
         entitling IMDI to the exclusive right to sell redeemable shares of the
         Funds. In addition, IMDI also receives distribution fees from certain
         of the Funds for purposes of advertising and marketing the shares of
         such Funds. IMDI is subject to net worth and capital requirements and
         bonding requirements imposed by the Securities and Exchange Commission.

         Prior to June 30, 2001, IMSC served as transfer agent and dividend
         paying agent for the Funds and provided certain shareholder and
         shareholder related services as required by the Funds. As part of the
         Company's restructuring plans initiated in the fourth quarter of the
         year ended March 31, 2001, the Company transitioned the transfer agency
         functions to a third party service provider, effective June 30, 2001.
         Effective August 1, 2001, IMSC was de-registered as a transfer agent
         with the SEC.

         MIMI also provides certain additional services for the Funds, such as
         fund accounting and administrative services.

         BASIS OF PRESENTATION

         The consolidated financial statements include the accounts of MIMI and
         subsidiaries (the "Company"). All intercompany accounts and
         transactions have been eliminated in consolidation.

         The financial statements of the Company have been prepared in
         accordance with accounting principles generally accepted in the United
         States of America and are denominated in U. S. currency. The following
         is a summary of significant accounting policies consistently followed
         by the Company in the preparation of its consolidated financial
         statements.

         CASH AND CASH EQUIVALENTS

         The Company includes as cash and cash equivalents: demand deposits in
         interest bearing bank accounts, short-term investments, repurchase
         agreements, and investments in U.S. Government Securities with original
         maturities of approximately three months or less when purchased.


                                      F-8
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         MARKETABLE SECURITIES

         Marketable securities, principally invested in the Funds, are recorded
         at fair value. The Company evaluates marketable securities for other
         than temporary impairment when the fair value of a marketable security
         has been below cost for an extended period of time (generally nine to
         twelve months). If an other than temporary impairment is determined to
         exist, the difference between the fair value of the marketable security
         and its cost is recognized as a charge to earnings in the period in
         which the impairment is determined.

         During the year ended March 31, 2002, the Company recorded an other
         than temporary impairment of approximately $672,000.

         Realized gains and losses are based on the specific identification
         method. For the years ended March 31, 2002 and 2001, comprehensive
         (loss) income consisted of the following:

<TABLE>
<CAPTION>
                                                                           MARCH 31,
                                                                  2002                2001
                                                                ---------         -----------
                                                                                 (AS RESTATED)
            <S>                                                 <C>              <C>
            Net (loss) income                                   $(484,869)        $ 2,173,913
            Other comprehensive income (loss):
               Unrealized holding losses arising during
               the period, net of tax                             (28,084)           (569,172)
               Reclassification adjustment for losses
               included in net (loss) income, net of tax          488,406             152,024
                                                                ---------         -----------
               Other comprehensive income (loss)                  460,322            (417,148)
                                                                ---------         -----------

               Comprehensive (loss) income                      $ (24,547)        $ 1,756,765
                                                                =========         ===========
</TABLE>


         At March 31, 2002 and 2001, the Company's accumulated other
         comprehensive income (loss) consists of unrealized appreciation and
         depreciation on marketable securities. At March 31, 2002 and 2001,
         gross unrealized gains and losses on marketable securities were as
         follows:

<TABLE>
<CAPTION>
                                                                         MARCH 31,
                                                                  2002                2001
                                                                ---------         -----------
            <S>                                                 <C>               <C>
            Gross unrealized gains                              $  69,223         $    17,764
            Gross unrealized losses                                    --            (686,591)
                                                                ---------         -----------
               Net unrealized gains (losses)                    $  69,223         $  (668,827)
                                                                =========         ===========
</TABLE>



                                      F-9
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         PROPERTY AND EQUIPMENT

         Property and equipment, which are stated at cost, are depreciated on a
         straight-line basis over the estimated useful lives of the related
         assets, which range from three to five years except for leasehold
         improvements. Leasehold improvements are amortized over the lesser of
         the initial or remaining term of the building lease.

         Additions and improvements that significantly extend the useful life of
         an asset are capitalized. Other expenditures for repairs and
         maintenance are charged to operations in the period incurred. The cost
         and accumulated depreciation of assets sold or retired are removed from
         the accounts and any related gains or losses are included in operations
         for the period.

         INTANGIBLE ASSETS

         Intangible assets, consisting principally of the cost of investment
         advisory and service contracts, are being amortized over a ten year
         period. Such amounts are shown net of accumulated amortization of
         $10,430,035 and $9,188,207 at March 31, 2002 and 2001, respectively.
         Management periodically assesses the value of its intangible assets by
         considering the future economic benefit associated with the revenue
         capacity of the contracts.

         REIMBURSEMENT TO FUNDS FOR EXPENSES

         The Company reimburses certain of the Funds' expenses on a contractual
         basis. The Company records this commitment on an accrual basis. The
         expense limitation may be terminated or revised, upon 90 day's prior
         written notice, by either party without payment or penalty.

         REVENUE RECOGNITION

         Revenues for services rendered are recognized on an accrual basis when
         the services are performed. Such revenues from services rendered
         include management, underwriting, distribution, fund accounting,
         administrative services and, through June 30, 2001, transfer agent
         fees.

         INCOME TAXES

         Deferred income taxes are recognized for the tax consequences in future
         years of differences between the tax basis of assets and liabilities
         and their financial reporting amounts. Deferred tax assets are also
         established for the future tax benefits of loss and credit
         carryforwards. Deferred tax assets are reduced by a valuation allowance
         when, in the opinion of management, it is more likely than not that all
         or some portion of the deferred tax assets will not be realized.
         Deferred tax assets and liabilities are adjusted for the effects of
         changes in tax laws and rates on the date of enactment.

         EARNINGS PER SHARE

         Basic earnings per share is computed by dividing net income available
         to common stockholders by the weighted-average number of common shares
         outstanding during the period. Diluted earnings per share reflects the
         potential dilution that could occur if securities or other contracts to
         issue common stock were exercised and resulted in the issuance of
         common stock.


                                      F-10
<PAGE>

         SELLING COMMISSIONS

         In conjunction with the sale of Class B and C shares, MIMI capitalizes
         selling commissions it pays broker-dealers. The Company amortizes
         deferred selling commissions related to Class B shares on a
         straight-line basis over six years or until the Class B shares are
         redeemed at which time the unamortized balance related to the redeemed
         shares is expensed. The Company amortizes commissions paid on Class C
         shares over one year. In conjunction with the sale of certain Class A
         shares, MIMI pays selling commissions that are recorded as a period
         cost and included in sales literature, advertising and promotion
         expenses in the statements of operations (see Note 2).

         USE OF ESTIMATES

         The preparation of financial statements in conformity with accounting
         principles generally accepted in the United States of America requires
         management to make some estimates and assumptions that may affect the
         reported amounts of assets and liabilities, disclosure of contingent
         assets and liabilities at the date of the financial statements and the
         reported amounts of revenues and expenses during the reporting periods.
         Actual results could differ from those estimates.

         LONG-LIVED ASSETS

         Long-lived assets, principally property and equipment, deferred selling
         commissions, and intangible assets, are reviewed and evaluated for
         impairment whenever events or changes in circumstances indicate that
         the carrying value of the assets may not be fully recoverable. The
         recoverability of such assets is measured by comparing the carrying
         value to the potential future cash flows to be generated by the
         respective assets. If these factors indicate that the assets are
         considered impaired, the impairment to be recognized is measured as the
         excess of the carrying value over the calculated potential future
         discounted cash flows. The Company does not believe there are any
         indicators that would suggest an adjustment to such assets or their
         estimated periods of recovery is considered necessary at March 31,
         2002.

         ADVERTISING

         The Company expenses the cost of advertising as incurred.

         STOCK OPTIONS

         The Company has elected to disclose pro forma net income and earnings
         per share based on fair value accounting rules and not to apply those
         rules in the consolidated statements of operations. No amounts have
         been reflected in the consolidated statements of operations as a result
         of the grant of stock options as the exercise price of the stock
         options equals or exceeds the market value of the Company's stock on
         the business day prior to the date of grant. The Company records
         amounts received upon the exercise of options by crediting common stock
         and additional paid-in capital. To the extent that the Company realizes
         an income tax benefit from the exercise or early disposition of certain
         stock options, this benefit results in a decrease in the current or
         deferred tax liability and an increase in additional paid-in capital.


                                      F-11
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying amounts of cash and cash equivalents, receivables,
         accounts payable, accrued expenses, restructuring costs and the
         payables to Funds for purchases of Funds' shares approximate fair value
         due to the short-term nature of these items.

         SEGMENT REPORTING

         The Company has determined that it operates in a single operating
         segment for purposes of presenting financial information and evaluating
         performance. As such, the accompanying consolidated financial
         statements present financial information in a format that is consistent
         with the financial information used by management for internal use.

         NEW ACCOUNTING PRONOUNCEMENTS

         In June 2001, the Financial Accounting Standards Board (the "Board")
         issued Statements of Financial Accounting Standards ("SFAS") No. 141
         ("FAS 141"), "Business Combinations," and No. 142 ("FAS 142"),
         "Goodwill and Other Intangible Assets". FAS 141 (i) requires that the
         purchase method of accounting be used for all business combinations
         initiated after June 30, 2001; (ii) establishes specific criteria for
         the initial recognition and measurement of intangible assets separately
         from goodwill; and (iii) requires unallocated negative goodwill be
         written off immediately. FAS 142 primarily addresses the accounting for
         goodwill and intangible assets subsequent to their initial recognition.
         FAS 142 (i) prohibits the amortization of goodwill and indefinite-lived
         intangible assets; (ii) requires that goodwill and indefinite lived
         intangible assets be tested annually for impairment (and in interim
         periods if certain events occur indicating that the carrying value of
         goodwill and/or other indefinite lived intangible assets may be
         impaired); (iii) requires that reporting units be identified for the
         purpose of assessing potential future impairments of goodwill; and (iv)
         removes the 40-year limitation on the amortization period of intangible
         assets that have finite lives. The provisions of FAS 141 are effective
         for all business combinations initiated after June 30, 2001. Most of
         the provisions of FAS 142 are effective for fiscal years beginning
         after December 15, 2001.

         In August 2001, the Board issued SFAS No. 144 ("FAS 144"), "Accounting
         for the Impairment or Disposal of Long-Lived Assets", which addresses
         (i) the recognition and measurement of the impairment of long-lived
         assets to be held and used and (ii) the measurement of long-lived
         assets to be disposed of by sale. In addition, FAS 144 supersedes the
         accounting and reporting provisions of APB No. 30 for segments of a
         business which are to be disposed. The provisions of FAS 144 are
         effective for fiscal years beginning after December 15, 2001.

         Management is currently assessing the impact of the adoption of such
         pronouncements, when applicable, on the Company's financial position,
         results of operations or cash flows.


                                      F-12
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         RECLASSIFICATIONS

         Certain amounts in the 2001 and 2000 consolidated financial statements
         have been reclassified to conform with the 2002 presentation.

2.       RESTATEMENT OF PREVIOUSLY REPORTED RESULTS OF OPERATIONS

         The restatement is related to the accounting for commissions paid by
         the Company in connection with certain Class A shares and the
         amortization of the deferred selling commissions related to Class B
         shares. The Company has restated the consolidated statements of
         financial condition as of March 31, 2001 and the consolidated
         statements of operations for each of the years ended March 31, 2000 and
         March 31, 2001 (and each of the quarters within the years ended March
         31, 2000 and 2001) and the quarters ended June 30, September 30, and
         December 31, 2001 (see Note 19).

         The Company has determined that the accounting for commissions paid on
         certain Class A shares of the Funds was not in accordance with
         Statement of Position No. 98-5, "Reporting on the Costs of Start-Up
         Activities" ("SOP No. 98-5"). In 1998, the staff of the Financial
         Accounting Standards Board announced that expenditures paid by an
         advisor in connection with the distribution of shares of a fund, when
         the advisor does not receive both a distribution fee pursuant to Rule
         12b-1 and a contingent deferred sales charge, do not meet the
         definition of an asset. As a result, amounts incurred and paid by the
         Company related to commissions on Class A shares should have been
         accounted for as start-up costs in accordance with SOP No. 98-5.
         Therefore, such amounts should be expensed as incurred rather than
         deferred and amortized.

         As a result of the restatement described above, the Company has
         restated the opening balances of retained earnings and total
         stockholders' equity in the accompanying financial statements as of
         March 31, 1999. The effect of such restatement is to decrease the
         Company's retained earnings and total stockholders' equity as of March
         31, 1999 by approximately $231,000. Such amount represents the
         after-tax effect of excess of commissions paid over amounts previously
         amortized for the period from July 23, 1998 to March 31, 1999. In
         addition, the Company recorded the cumulative effect of the change in
         accounting principle of $519,000, net of tax benefit of $313,000, to
         reflect the adoption of SOP No. 98-5 as of April 1, 1999 in the
         consolidated statement of operations for the year ended March 31, 2000.
         In addition, the Company's previous amortization policy for deferred
         selling commissions for Class B shares was to amortize such amounts on
         a straight-line basis without recognition of additional amortization
         expense when Class B shares were redeemed. The Company's amortization
         policy should have reflected Class B redemption activity. The Company's
         restated policy is to amortize deferred selling commissions related to
         Class B shares on a straight-line basis over six years or until the
         Class B shares are redeemed at which time the unamortized balance
         related to the redeemed shares is expensed. Therefore, the Company has
         restated the consolidated statements of financial condition as of March
         31, 2001 and the consolidated statements of operations for the year
         ended March 31, 2001 (and each of the quarters within the year ended
         March 31, 2001) and the quarters ended June 30, 2001, September 30,
         2001 and December 31, 2001 (see Note 19).


                                      F-13
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         The table below provides a summary of selected balances, as reported
         and as restated:

<TABLE>
<CAPTION>
                                                                         AS OF OR FOR THE PERIOD ENDED
                                                                                   MARCH 31,
                                                                       ---------------------------------
                                                                            2001                2000
                                                                       ------------         ------------
<S>                                                                    <C>                  <C>
CONSOLIDATED STATEMENTS OF OPERATIONS
(Loss) earnings per share - basic
    As previously reported                                             $       0.14         $       0.34
    As restated                                                        $       0.12         $       0.30
(Loss) earnings per share - diluted
    As previously reported                                             $       0.14         $       0.34
    As restated                                                        $       0.12         $       0.30
Sales literature, advertising and promotion
    As previously reported                                             $  4,958,612         $  4,751,567
    As restated                                                        $  5,798,128         $  5,682,136
Amortization of deferred selling commissions
    As previously reported                                             $  2,647,670         $  1,113,821
    As restated                                                        $  2,495,863         $    653,745
Total expenses
    As previously reported                                             $ 47,542,997         $ 52,594,284
    As restated                                                        $ 48,230,706         $ 53,064,777
(Loss) income before income taxes and cumulative effect of
accounting change
    As previously reported                                             $  4,604,377         $ 10,911,846
    As restated                                                        $  3,916,668         $ 10,441,353
Provision for income taxes
    As previously reported                                             $  1,961,103         $  4,463,950
    As restated                                                        $  1,742,755         $  4,244,184
Net (loss) income before cumulative effect of accounting change
    As previously reported                                             $  2,643,274         $  6,447,896
    As restated                                                        $  2,173,913         $  6,197,169
Cumulative effect of accounting change, net of tax benefit
    As previously reported                                                       na                   na
    As restated                                                                  na         $(   519,074)
Net (loss) income
    As previously reported                                             $  2,643,274         $  6,447,896
    As restated                                                        $  2,173,913         $  5,678,095

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
Deferred selling commissions
    As previously reported                                             $  6,990,800         $  5,828,749
    As restated                                                        $  4,630,312         $  4,155,971
Other assets
    As previously reported                                             $  1,102,545         $    624,964
    As restated                                                        $  1,295,709         $    624,964
Total assets
    As previously reported                                             $ 64,061,232         $ 64,071,777
    As restated                                                        $ 61,893,908         $ 62,795,425
Deferred tax asset (liability)
    As previously reported                                             $(   697,260)        $( 1,690,899)
    As restated                                                             156,902         $( 1,018,613)
Total liabilities
    As previously reported                                             $  5,335,035         $  7,777,183
    As restated                                                        $  4,637,775         $  7,501,534
</TABLE>


                                      F-14
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<S>                                                                    <C>                  <C>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Retained earnings
    As previously reported                                             $ 20,424,882         $ 18,156,144
    As restated                                                        $ 18,954,818         $ 17,155,441
Total stockholders' equity
    As previously reported                                             $ 58,726,197         $ 56,294,594
    As restated                                                        $ 57,256,133         $ 55,293,891
</TABLE>

         The restatement for the commissions related to the Class A and Class B
         shares, as described above, has no impact on the Company's liquidity or
         cash flows.

3.       PROPERTY AND EQUIPMENT

         Property and equipment consist of the following:

<TABLE>
<CAPTION>
                                                              MARCH 31,
                                                  ---------------------------------
                                                      2002                  2001
            <S>                                   <C>                  <C>
            Furniture and equipment               $  1,665,917         $  1,096,457
            Computer hardware                          747,809            2,196,529
            Computer software                          203,788              649,189
            Leasehold improvements                     802,230              515,485
                                                  ------------         ------------
                   Total                             3,419,744            4,457,660
            Less accumulated depreciation             (926,346)          (3,708,793)
                                                  ------------         ------------
                                                  $  2,493,398         $    748,867
                                                  ============         ============
</TABLE>

4.       INCOME TAXES

         The (benefit) provision for income taxes consists of the following:


                                      F-15
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                            YEAR ENDED MARCH 31,
                                           -----------------------------------------------------
                                               2002               2001                  2000
                                                              (AS RESTATED)         (AS RESTATED)
            <S>                            <C>                <C>                   <C>
            Current income taxes:
               Federal                     $    (62,305)      $  2,242,595          $  2,367,742
               State                                 --            383,887               405,309
                                           ------------       ------------          ------------
                                                (62,305)         2,626,482             2,773,051
                                           ------------       ------------          ------------
            Deferred income taxes:
               Federal                          (18,405)          (754,561)              988,711
               State                            (13,816)          (129,166)              169,247
                                           ------------       ------------          ------------
                                                (32,221)          (883,727)            1,157,958
                                           ------------       ------------          ------------
                                           $    (94,526)      $  1,742,755          $  3,931,009(*)
                                           ============       ============          ============
</TABLE>


             (*) The tax provision for the year ended March 31, 2000 is
             comprised of $4,244,184 related to income before income taxes
             and cumulative effect of accounting change, less the $313,175
             tax benefit related to the cumulative effect of accounting
             change.

         A reconciliation of the statutory federal income tax rate to the
         effective rate is as follows:

<TABLE>
<CAPTION>
                                                                          YEAR ENDED MARCH 31,
                                                              --------------------------------------------
                                                              2002              2001             2000
                                                                           (AS RESTATED)     (AS RESTATED)
            <S>                                               <C>          <C>               <C>
            Statutory federal income tax rate                  34.0%            34.0%            34.0%
            State taxes, net of federal benefit                 3.6              3.6              3.6
            Amortization of intangible assets                 (62.4)             8.8              3.6
            Dividend income                                    45.9             (3.1)            (2.7)
            Other                                              (4.8)             1.2              2.4
                                                              -----             ----             ----
                                                               16.3%            44.5%            40.9%
                                                              =====             ====             ====
</TABLE>


         At March 31, 2002 and 2001, deferred income taxes consist of the
         following:

<TABLE>
<CAPTION>
                                                                 MARCH 31, 2002                   MARCH 31, 2001
                                                                 DEFERRED TAXES                   DEFERRED TAXES
                                                          -----------------------------     ---------------------------
                                                             ASSETS         LIABILITIES       ASSETS        LIABILITIES
                                                          -----------       -----------     ----------     ------------
                                                                                                   (AS RESTATED)
            <S>                                           <C>               <C>             <C>            <C>
            Accelerated depreciation on fixed assets      $   167,548       $       --      $  273,402      $       --
            Unrealized depreciation on investments            226,990               --         251,680              --
            Accrued payables not yet deducted for
              tax purposes                                    392,472               --         501,136
            Restructuring costs                                84,605               --         457,581              --
            Class A share commission expense                  478,817               --         712,839
            Prepaid Class B and C share commissions                --        1,133,643              --       1,712,752
            Other                                                  --          326,984              --         326,984
                                                          -----------       ----------      ----------      ----------
                                                          $ 1,350,432       $1,460,627      $2,196,638      $2,039,736
                                                          ===========       ==========      ==========      ==========

            Net deferred tax (liability) asset                              $ (110,195)     $  156,902
                                                                            ==========      ==========
</TABLE>


                                      F-16
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         At March 31, 2001, the deferred tax asset is included in "other assets"
         in the accompanying statement of financial condition.


5.       SERVICES PROVIDED TO THE FUNDS PURSUANT TO CONTRACTUAL AGREEMENTS

         The Company is the manager of the Funds and, as such, furnishes the
         Funds with accounting and various other services and office facilities
         in Boca Raton, Florida. In addition, the Advisers act as investment
         adviser for certain of the Funds. For these services and facilities,
         the Funds pay the Advisers monthly management fees at annual rates
         ranging from .40% to 1.00% of the Funds' average daily net assets. The
         Management Agreements may be terminated upon 60 days written notice by
         a vote of the majority of the outstanding voting securities of the
         Funds, by vote of a majority of the Funds' entire Board of Trustees, or
         by the Advisers.

         Sub-advisory fees from the Canadian Funds represent fees earned for
         certain management services rendered to mutual funds managed by MFC.

         IMDI is the principal underwriter and national distributor of the
         Funds' shares and, as such, purchases shares from the Funds at net
         asset value to fill orders received from investment dealers. IMDI is
         permitted to resell such shares at the public offering price, allowing
         for discounts to dealers, if any. The difference in the purchase price
         and the resale price constitutes underwriting fee income to IMDI.

         MIMI has entered into Administrative Services Agreements with the Funds
         wherein MIMI provides various services, including maintenance of
         registration or qualification of Fund shares under state "Blue Sky"
         laws, assisting in the preparation of U.S. Federal, state and local
         income tax returns and preparing financial and other information for
         prospectuses, statements of additional information, and periodic
         reports to shareholders. For these services, the Funds pay MIMI monthly
         fees at an annual rate of .10% of the Funds' average daily net assets.
         The Administrative Services Agreement may be terminated by MIMI upon 60
         days written notice, or by the Funds upon 60 days written notice and
         authorization by the Fund's Board of Trustees.

         MIMI has entered into Fund Accounting Services Agreements with the
         Funds wherein MIMI provides certain accounting and pricing services for
         the Funds. As compensation for those services, the Funds pay MIMI a
         monthly fee plus certain out-of-pocket costs. The monthly fee is based
         upon the net assets of each fund at the preceding month end at rates
         ranging from $1,000 to $6,500. The Fund Accounting Services Agreements
         may be terminated by MIMI upon 90 days written notice, or by the Funds
         upon 60 days written notice and authorization by the Funds' Board of
         Trustees.

         Through June 30, 2001, IMSC provided services to the Funds under
         Transfer Agency and Shareholder Services Agreements, which provided
         compensation on a per account basis plus reimbursement for
         out-of-pocket costs. Effective June 30, 2001, the transfer agency
         function was transitioned to a third party service provider.


                                      F-17
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


6.       DISTRIBUTION FEES

         Pursuant to distribution plans adopted by certain of the Funds, IMDI
         receives distribution fees at annual rates ranging from .25% to 1.00%
         of certain of the Funds' average daily net assets attributable to the
         respective classes of shares, subject to the respective distribution
         plan, for the advertising and marketing of such Funds. The plans may be
         terminated at any time. If such termination occurs, the Funds will owe
         no payments to IMDI, other than any portion of the distribution fees
         accrued through the effective date of termination, but unpaid as of
         such date.

7.       ACCRUED EXPENSES AND OTHER LIABILITIES

         Accrued expenses and other liabilities consist of the following:

<TABLE>
<CAPTION>
                                                    MARCH 31,
                                         ------------------------------
                                             2002               2001
<S>                                      <C>                <C>
Accrued compensation and benefits        $ 2,020,759        $   409,049
Accrued lease expense                        564,646            419,867
Accrued distribution fees payable            188,081            297,477
Sub-advisory fees payable                     32,821             39,258
Other                                        336,737            896,136
                                         -----------        -----------
                                         $ 3,143,044        $ 2,061,787
                                         ===========        ===========
</TABLE>

         In connection with the acquisition of MFC by Investors Group Inc. on
         April 20, 2001, the Company incurred costs outside of its normal course
         of business. The acquisition of MFC caused what was deemed to be a
         change in control of the Company pursuant to the Management Agreements
         with the Funds. As a result of the change in control, the Funds were
         required to solicit, and subsequently obtained, approval from the
         shareholders of the Funds of interim management agreements, which were
         under the same terms and conditions as the Management Agreements in
         place prior to the acquisition.

         Total costs incurred by the Company in connection with the takeover of
         MFC were approximately $120,000 and $600,000 for the years ended March
         31, 2002 and 2001, respectively. Such costs, included in general and
         administrative expenses, consisted principally of legal, printing,
         mailing, solicitation and other costs related to a proxy statement
         submitted to the Funds' shareholders and other such matters.

         MFC reimbursed the Company for the amounts, on an after-tax basis, that
         the Company incurred in connection with matters described above. Total
         amounts received from MFC and recorded as additional paid in capital
         were approximately $76,000 and $374,000 for the years ended March 31,
         2002 and 2001, respectively.



                                      F-18
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


8.       LINE OF CREDIT

         During October 2001, the Company renewed a $10,000,000 line of credit
         (the "Agreement"), with a maturity date of October 11, 2002, to provide
         for the Company's general working capital and short-term capital
         expenditure needs. The Agreement provides for interest and principal on
         advances outstanding until maturity. The advances bear interest at a
         fluctuating rate equal to the LIBOR Market Index Rate plus 1.50%. The
         Agreement requires the Company to maintain a specified consolidated
         tangible net worth. As of March 31, 2002 and 2001, the Company had no
         amounts outstanding under the Agreement.

9.       COMMITMENTS

         The Company has various lease agreements for office space and
         equipment. The Company entered into a new lease effective March 1, 2001
         for its corporate offices. The new lease extends through 2013 and has
         renewal options through 2023. The Company moved its corporate offices
         in August 2001.

         Under operating leases with remaining non-cancelable terms in excess of
         one year at March 31, 2002, aggregate annual rental payments for office
         space and equipment are as follows:


<TABLE>
<CAPTION>
           YEAR ENDING MARCH 31,
           <S>                    <C>
              2003                $    1,457,000
              2004                     1,417,000
              2005                     1,412,000
              2006                     1,446,000
              2007                     1,480,000
              Thereafter               9,624,000
                                  --------------
                                  $   16,836,000
                                  ==============
</TABLE>

         Rent expense for the years ended March 31, 2002, 2001 and 2000 was
         approximately $1,369,000, $1,722,000 and $992,000, respectively. A
         portion of these amounts represent the payment of common area operating
         expenses in connection with the Company's office leases. Total common
         area operating expenses were approximately $542,000, $210,000 and
         $157,000 for the years ended March 31, 2002, 2001 and 2000,
         respectively.

10.      STOCK OPTION PLANS

         The Company has a stock option plan (the "Option Plan") which provides
         for the granting of non-incentive and incentive stock options. The
         maximum number of shares reserved for issuance under the Option Plan is
         3,114,220 common shares. Options are granted to key employees of the
         Company. The Option Plan is administered by the Human Resource and
         Corporate Governance Committee (the "Committee"), which reports its
         recommendations to the Board of Directors for specific option grants.
         Option vesting generally ranges from one to five years. The exercise
         price of the options shall not be less than the market price per common
         share on the Toronto Stock Exchange on the business day prior to the
         date of the grant.


                                      F-19
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         Non-incentive options granted under the Option Plan shall expire five
         years after the date of grant and incentive options shall expire not
         later than ten years after the date of grant. Information regarding the
         above options for the years ended March 31, 2002, 2001 and 2000 is as
         follows:

<TABLE>
<CAPTION>
                                                                                YEAR ENDED
                                                 ----------------------------------------------------------------------------
                                                    MARCH 31, 2002              MARCH 31, 2001              MARCH 31, 2000
                                                 ---------------------      ---------------------      ----------------------
                                                              WEIGHTED                   WEIGHTED                    WEIGHTED
                                                              AVERAGE                    AVERAGE                     AVERAGE
                                                              EXERCISE                   EXERCISE                    EXERCISE
                                                   SHARES       PRICE         SHARES       PRICE         SHARES        PRICE
                                                 ---------    --------      ---------    --------      ---------     --------
         <S>                                     <C>          <C>           <C>          <C>           <C>           <C>
         Options outstanding, beginning
             of year                             1,322,000    $   7.01      1,505,500    $   7.07      1,372,500     $   8.04
         Options granted                           355,000        4.56        101,000        5.57        547,000         5.40
         Options exercised                              --          --        (35,000)       1.69         (3,000)        1.25
         Options expired                          (355,000)       6.87       (249,500)       7.54       (411,000)        8.14
                                                 ---------                  ---------                  ---------
         Options outstanding, end of year        1,322,000        6.39      1,322,000        7.01      1,505,500         7.07
                                                 =========                  =========                  =========
         Options exercisable, end of year        1,000,000        6.98        767,500        8.09        958,500         8.02
                                                 =========                  =========                  =========
</TABLE>


         Significant option groups outstanding as of March 31, 2002 and related
         price and life information follows:

<TABLE>
<CAPTION>
                                                   OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
                                     ------------------------------------------------     ----------------------------
                                                                           WEIGHTED
                                                         WEIGHTED           AVERAGE                           WEIGHTED
                                                         AVERAGE           REMAINING                          AVERAGE
                                                         EXERCISE         CONTRACTUAL                         EXERCISE
         RANGE OF EXERCISE PRICES    OUTSTANDING          PRICE              LIFE         EXERCISABLE          PRICE
         ------------------------    -----------         --------         -----------     -----------         --------
         <S>                         <C>                 <C>              <C>             <C>                 <C>
               $1.25-$4.91              644,500          $  4.36             3.20            322,500          $  4.17
               $5.40-$9.62              514,500             6.76             2.00            514,500             6.76
               $10.92-$12.35            106,500            12.35             0.40            106,500            12.35
               $14.02-$18.63             56,500            14.84             0.90             56,500            14.84
                                      ---------          -------             ----          ---------          -------
                                      1,322,000          $  6.39             2.40          1,000,000          $  6.98
                                      =========          =======             ====          =========          =======
</TABLE>

         All unvested options outstanding as of April 20, 2001 became fully
         vested and exercisable in accordance with the provisions of the Option
         Plan, as a result of the change in control of MFC.

         The Company utilizes the "intrinsic value based method" of accounting
         for stock options issued to employees. Had compensation costs been
         determined based on the "fair value based method" at the grant date for
         stock options it would have produced the following results:

<TABLE>
<CAPTION>
                                                               YEAR ENDED MARCH 31,
                                                 ------------------------------------------------
                                                     2002               2001             2000
                                                                   (AS RESTATED)    (AS RESTATED)
         <S>                                     <C>               <C>              <C>
         Pro forma net (loss) income             $ (1,132,776)      $ 1,621,499      $ 4,805,810
         Basic (loss) earnings per share                (0.06)             0.09             0.26
         Diluted (loss) earnings per share              (0.06)             0.09             0.26
</TABLE>



                                      F-20
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         The fair value of each option grant is estimated on the date of grant
         using the Black-Scholes option-pricing model with the following
         weighted average assumptions:

<TABLE>
<CAPTION>
                                                        MARCH 31,
                                         -------------------------------------
                                         2002              2001           2000
         <S>                             <C>               <C>            <C>
         Dividend yield                  0.20%             0.20%          0.00%
         Expected volatility               67%               63%            66%
         Risk free interest rates        4.95%             6.54%          6.24%
         Expected lives in years            5                 5              5
</TABLE>


11.      STOCK COMPENSATION AGREEMENT

         In May 2000, the Company awarded a grant of 115,000 shares of the
         Company's common stock to a key salaried employee pursuant to a stock
         compensation agreement. The shares were scheduled to vest in three
         installments over three years provided the employee remained in the
         Company's employ on each of the vesting dates. The shares issued were
         recorded at their fair market value on the date of the grant with a
         corresponding reduction of stockholders' equity, which was to be
         amortized as compensation expense over the related vesting period. In
         November 2001, the employee resigned from the Company and pursuant to
         the terms of the agreement, the non-vested portion of the stock grant
         was forfeited and cancelled. As a result, 86,250 shares of common stock
         pursuant to the stock compensation agreement were retired.

12.      CAPITAL TRANSACTIONS

         In July 2000, the Company entered into a normal course issuer bid,
         which was approved by the Toronto Stock Exchange ("TSE"), to repurchase
         up to 500,000 of the outstanding shares of the Company's common stock,
         representing 2.7% of the issued and outstanding common shares at the
         date of the notice. The bid will terminate on the earlier of the date
         on which the maximum number of common shares have been purchased, the
         date the Company provides notice of termination, or July 23, 2001. No
         shares were purchased by the Company prior to July 23, 2001.

         In July 1999, the Company entered into a normal course issuer bid,
         which was approved by the TSE, to repurchase up to 5% of the Company's
         common stock. During the year ended March 31, 2000, the Company
         repurchased 621,400 shares at a cost of approximately $2,461,000. The
         shares were acquired at market price at the time of the acquisition and
         were immediately retired.

13.      EARNINGS (LOSS) PER SHARE

         The following table reconciles the weighted average shares outstanding
         used to calculate basic and diluted earnings (loss) per share for the
         years ended March 31, 2002, 2001 and 2000:


                                      F-21
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
                                                                               2002                2001                2000
                                                                            ----------          ----------          ----------
            <S>                                                             <C>                 <C>                 <C>
            Weighted average number of common shares
               outstanding used in basic calculation                        18,663,985          18,631,729          18,781,410

            Effect of dilutive stock options                                        --             102,791              35,660
                                                                            ----------          ----------          ----------
            Weighted average number of common and
               common equivalent shares outstanding used
               in the diluted calculation                                   18,663,985          18,734,520          18,817,070
                                                                            ==========          ==========          ==========
</TABLE>

         Weighted average common stock equivalents of 2,124 shares for the year
         ended March 31, 2002 have been excluded due to their anti-dilutive
         effect in a net loss period.

         The following table reconciles the (loss) earnings per share before and
         after the cumulative effect of the accounting change for the years
         ended March 31, 2002, 2001 and 2000:


<TABLE>
<CAPTION>
                                                                               2002                2001                2000
                                                                            ----------          ----------          ----------
                                                                                               (AS RESTATED)       (AS RESTATED)
            <S>                                                           <C>                 <C>                 <C>
            Basic (loss) earnings per share
                Net (loss) income before cumulative
                  effect of accounting change                             $      (0.03)       $       0.12        $       0.33
                Cumulative effect of accounting change(*)                           --                  --               (0.03)
                                                                          ------------        ------------        ------------
                Basic (loss) earnings per share                           $      (0.03)       $       0.12        $       0.30
                                                                          ============        ============        ============
            Diluted (loss) earnings per share
                Net (loss) income before cumulative
                  effect of accounting change                             $      (0.03)       $       0.12        $       0.33
                Cumulative effect of accounting change(*)                           --                  --               (0.03)
                                                                          ------------        ------------        ------------
                Diluted (loss) earnings per share                         $      (0.03)       $       0.12        $       0.30
                                                                          ============        ============        ============
</TABLE>


                  (*) See Note 2 for discussion of cumulative effect of change
                  in accounting principle relating to adoption of SOP No. 98-5.

14.      PROFIT SHARING PLAN

         MIMI maintains a 401(k) profit sharing plan (the "401(k) Plan") in
         which all eligible, full-time employees may participate. MIMI
         contributes to a trust 100% of the first 6% of pay that each employee
         contributes. Participants are, at all times, fully vested in their
         contributions, and Company contributions become fully vested to the
         participants after six years of continued employment. Additionally, on
         an annual basis, the Company's Board of Directors may vote to make an
         additional contribution to the 401(k) Plan. MIMI's total contributions
         for the years ended March 31, 2002, 2001 and 2000 were approximately
         $204,000, $443,000 and $309,000, respectively.

15.      CONCENTRATION OF RISK

         During the years ended March 31, 2002 and 2001, the Company had cash
         and cash equivalents on deposit in excess of Federal deposit insurance
         limits. The Company's policy is to only have funds on deposit with
         reputable financial institutions.



                                      F-22
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         A significant percentage of the Company's assets under management are
         represented by one fund, Ivy International Fund. A decline in the
         performance of Ivy International Fund or the securities markets in
         general could have an adverse affect on the Company's revenues.

         The Company has dealer agreements with over a thousand broker-dealer
         firms; however, during the years ended March 31, 2002, 2001 and 2000,
         two firms were responsible for approximately 47%, 46% and 60%,
         respectively, of the Company's mutual fund sales.

16.      RESTRUCTURING

         During the year ended March 31, 2001, the Company recorded a pre-tax
         charge of $3,032,000 to cover restructuring costs associated with the
         plan of outsourcing the transfer agency operations and downsizing
         sales, marketing and other various support functions. The charge
         included $2,352,000 related to employee severance compensation and
         benefits and $680,000 related to lease obligations. This initiative
         resulted in a total headcount reduction of approximately fifty-five
         employees. During the same period, the Company made twenty-nine cash
         payments of severance compensation packages totaling $1,262,000. For
         the year ended March 31, 2002, the Company made payments totaling
         approximately $1,545,000 for severance compensation packages and lease
         obligations. The Company anticipates that the remaining restructuring
         costs of approximately $225,000, which primarily relates to lease
         obligations, will be paid from funds provided from operations during
         the six-month period ending September 30, 2002.

17.      EMPLOYMENT AGREEMENTS

         During the year ended March 31, 2002, the Board of Directors of MIMI
         approved amended Change in Control Employment Agreements (the
         "Employment Agreements") with corporate officers (hereinafter referred
         to as "Key Employees") and an amended Employee Retention Plan (the
         "Retention Plan") for all eligible employees. Under the terms of the
         Employment Agreements, if, at any time within two years of a change in
         control, as defined in the Employment Agreements, the Key Employees'
         position, salary, bonus, place of work, or company-provided benefits
         are modified, or employment is terminated for any reason other than
         cause, as defined in the Employment Agreements, then the Key Employee
         is entitled to receive a severance payment. Such severance payment is
         equal to one to two times the Key Employee's salary and, in most cases,
         the average of the bonuses received by the Key Employee for the prior
         two years. Under the terms of the Retention Plan, in the event of a
         change in control, as defined in the Retention Plan, each employee of
         MIMI whose employment is terminated will receive compensation income
         over a period which will be the greater of: (1) compensation income
         from the date of termination to August 15, 2002 or (2) one month of
         compensation income per year of service (to a maximum of 24 months).


                                      F-23
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


18.      DIFFERENCES FROM CANADIAN ACCOUNTING PRINCIPLES

         The Company has reviewed its consolidated financial statements for the
         periods presented for compliance with accounting principles generally
         accepted in Canada and has determined that there are no material
         differences between the amounts reported in these consolidated
         financial statements and the amounts which would be reported in
         accordance with accounting principles generally accepted in Canada.

19.      SELECTED QUARTERLY INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
            FISCAL 2002 FOR THE QUARTER ENDED                     JUN 30           SEPT 30           DEC 31           MAR 31(**)
                                                                 ---------        ---------         ---------         ----------
                                                                                (AS RESTATED)
                                                                 ---------------------------------------------------------------
                                                                       (In thousands of dollars, except per share amounts)
            <S>                                                  <C>              <C>               <C>               <C>
            Revenues                                             $   9,035        $   7,071         $   6,261         $   5,130
            Expenses                                                 8,335            7,227             6,870             5,645
            Provision (benefit) for income taxes                       270              (34)             (195)             (137)
            Net income (loss)                                          430             (122)             (414)             (378)
            Earnings (loss) per share - basic                         0.02            (0.01)            (0.02)            (0.02)
            Earnings (loss) per share - diluted(*)                    0.02            (0.01)            (0.02)            (0.02)
</TABLE>


         AS PREVIOUSLY REPORTED:

<TABLE>
<CAPTION>
            FISCAL 2002 FOR THE QUARTER ENDED                     JUN 30           SEPT 30           DEC 31
                                                                 ---------        ---------         ---------
                                                                  (In thousands of dollars, except per share
                                                                                      amounts)
            <S>                                                  <C>              <C>               <C>
            Revenues                                             $   9,035        $   7,071         $   6,261
            Expenses                                                 8,268            7,297             6,915
            Provision (benefit) for income taxes                       296              (60)             (212)
            Net income (loss)                                          471             (166)             (442)
            Earnings (loss) per share - basic                         0.03            (0.01)            (0.02)
            Earnings (loss) per share - diluted(*)                    0.03            (0.01)            (0.02)
</TABLE>


         (*) Weighted average common stock equivalents ("CSEs") of 495 and 869
         shares for the quarters ended September 30, 2001 and March 31, 2002,
         respectively, have been excluded from the diluted calculations due to
         their anti-dilutive effect in a net loss period. There were no CSEs for
         the quarter ended December 31, 2001.

         (**) The results of operations for the quarter ended March 31, 2002
         includes a charge of approximately $672 for other than temporary
         impairment of marketable securities.


                                      F-24
<PAGE>

MACKENZIE INVESTMENT MANAGEMENT INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         AS RESTATED:

<TABLE>
<CAPTION>
            FISCAL 2001 FOR THE QUARTER ENDED                     JUN 30           SEPT 30           DEC 31             MAR 31
                                                                 ---------        ---------         ---------         ----------
                                                                       (In thousands of dollars, except per share amounts)
            <S>                                                  <C>              <C>               <C>               <C>
            Revenues                                             $  15,573        $  14,272         $  12,089         $  10,213
            Expenses**                                              13,806           11,110            10,495            12,820
            Provision (benefit) for income taxes                       737            1,309               686              (989)
            Net income (loss)                                        1,030            1,853               908            (1,618)
            Earnings (loss) per share - basic                         0.06             0.10              0.05             (0.09)
            Earnings (loss) per share - diluted(**)                   0.05             0.10              0.05             (0.09)
</TABLE>

         AS PREVIOUSLY REPORTED:


<TABLE>
<CAPTION>
            FISCAL 2001 FOR THE QUARTER ENDED                     JUN 30           SEPT 30           DEC 31             MAR 31
                                                                 ---------        ---------         ---------         ----------
                                                                       (In thousands of dollars, except per share amounts)
            <S>                                                  <C>              <C>               <C>               <C>
            Revenues                                             $  15,573        $  14,272         $  12,089         $  10,213
            Expenses**                                              13,612           10,957            10,318            12,656
            Provision (benefit) for income taxes                       811            1,368               754              (972)
            Net income (loss)                                        1,150            1,947             1,017            (1,471)
            Earnings (loss) per share - basic                         0.06             0.10              0.05             (0.08)
            Earnings (loss) per share - diluted(*)                    0.06             0.10              0.05             (0.08)
</TABLE>

         (*) Weighted average CSEs of 65,551 shares for the quarter ended March
         31, 2001 have been excluded from the diluted calculation due to their
         anti-dilutive effect in a net loss period.

         (**) Expenses for the quarter ended March 31, 2001 include
         restructuring costs of $3,032.


                                      F-25